Dubai fears overshadow markets

Fears over Dubai’s ability to pay its debts overshadowed trading for a second successive session today in a nervous end to a volatile week.

The FTSE 100 Index came under heavy early pressure – losing more than 1.5% after yesterday’s 3% tumble – but later stemmed the bleeding to stand 16.6 points lower at 5117.6 by mid-morning.

Asian markets were also under pressure overnight as Hong Kong’s Hang Seng fell almost 5% and Japan’s Nikkei was 3% lower.

The US was closed for Thanksgiving yesterday but also looks set to slide when Wall Street trading resumes later today, taking the Dow Jones Industrial Average down as much as 3%.

Markets saw a huge flight from risk yesterday after Dubai World, the emirate’s main development engine, said it was asking creditors to delay paying back its $60bn (€40bn) debt.

Mining stocks came under heavy pressure as investors looked for safer havens, with Anglo American down 56p to 2507p, Fresnillo off 15.5p to 837p and Randgold Resources 82p lower at 4943p.

UK banks have lent more than £50 billion to the United Arab Emirates – of which Dubai is the second biggest member – but most managed to claw back some lost ground today following yesterday’s sell-off.

Royal Bank of Scotland was 0.4p up at 33.4p and Barclays up 6.5p to 297.6p, although HSBC was 11.6p down at 694p.

Elsewhere, TalkTalk owner Carphone Warehouse rose 2p to 194.3p after it posted an 88% rise in pre-tax profits to £75m (€82m) and said it expected the strong showing to continue into the second half.

But retailers were on the bank foot following downgrades for many in the sector from Goldman Sachs. Home Retail Group, which owns Argos, was off 7p to 293.6p in the top flight, while Comet owner Kesa Electricals was 6.3p down at 150.6p in the FTSE 250.