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Tue 1 Dec 2009 10:10 AM

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UAE, Qatar markets drop on Dubai debt fears

UPDATE 7: UAE markets close lower, but DP World shares surge, buoyed by UAE leaders' comments.

UAE markets ended lower for a consecutive day and the last trading session of a shorter week, but investors showed more inclination to buy than on Monday when panic selling gripped Dubai and Abu Dhabi bourses."There was buying in selected stocks, and towards the end of the session we saw buying in Emaar," says Ayman el-Saheb, director of operations at Darahem Financial Brokerage.

"The panic is not yet over, but people are becoming aware this is not a catastrophe."

Property and related stocks took the brunt of the selling spree on fears that Dubai's real estate market is still struggling, after a debt "standstill" was requested for state-owned developer Nakheel's upcoming sukuk repayment.

Bellwether Emaar Properties ended 9.9 percent lower, and construction firm Arabtec slumped 9.8 percent.

The index ended 5.6 percent lower at 1,831 points.

Shares in Dubai Ports World, a subsidiary of debt-laden conglomerate Dubai World, surged over 5 percent in intra-day trading, buoyed by positive comments by UAE leaders.

DP World, listed on Nasdaq Dubai, rose 5.2 percent after Dubai's ruler, Sheikh Mohammed bin Rashid al-Maktoum, said the emirate was "strong and persistent".

"They do not understand anything," Sheikh Mohammed said when asked about the global reaction to Dubai World's debt standstill request and restructuring plans.

DP World, a profitable subsidiary of its parent company, is not involved in the debt restructuring.

Earlier in the day, Sheikh Khalifa bin Zayed al-Nahayan, president of the UAE and ruler of Abu Dhabi, said the UAE economy was showing signs of growth in the fourth quarter.

Abu Dhabi's index recovered some losses, and ended 3.6 percent lower as banks and real estate stocks continued to face selling pressure.

The benchmark ended at 2,573 points.

UAE exchanges will now reopen on December 6 after an extended public holiday for National Day. Financials lead the benchmarks of Qatar and Kuwait to end lower on Tuesday, the first day of trading on both bourses after a Dubai conglomerate shook global markets last week with plans to delay repayment of heavy debts.

Banks are the top losers in Qatar, as investors query the extent of lenders' exposure to the Dubai World and its related companies.

Doha Bank declined 9.4 percent and Qatar National Bank tumbled 9 percent. Commercial Bank of Qatar slumped 10 percent.

The index plummeted 8.3 percent to 6,598 points.

Banking stocks dragged on the Kuwait index too, after the central bank told state news agency on Monday that two Kuwaiti banks had exposure to Dubai World and its unit Nakheel.

Gulf Bank fell 8.5 percent and Kuwait Finance House slid 5.5 percent, as does National Bank of Kuwait.

The benchmark fell 2.7 percent to end on 6,746 points. (Reuters)