HK dives nearly 5% as Asian stocks slump on Dubai debt fears
Posted: 27 November 2009 1542 hrs

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HONG KONG - Hong Kong shares tumbled almost five percent on Friday, leading falls in Asian stock markets as investors were spooked after Dubai asked for a debt repayment delay for a key state-owned firm.

The benchmark Hang Seng Index dived 1,075.91 points or 4.84 percent - its biggest single-day drop in eight months - to end at 21,134.50 points.

Elsewhere, Tokyo plunged 3.22 percent, Seoul slumped 4.69 percent and Sydney closed 2.90 percent lower on global investor alarm about the potential for a widespread default following Dubai's shock demand.

Shanghai was 1.05 percent down with Chinese banks also down on concerns Beijing may tighten monetary policy.

The falls in Asia followed steep declines in Europe and the Middle East Thursday as investors' appetite for risk evaporated. US markets were closed for the Thanksgiving holiday.

The government of Dubai rocked financial markets on Wednesday when it said it would ask creditors of its Dubai World conglomerate, which has reported debts of 59 billion US dollars, for a debt moratorium of at least six months.

The Dubai request "fed a climate of insecurity and crisis of confidence at a time when fears are mounting about excessive public debt", said Xavier de Villepion, an analyst with Global Equities in Paris.

Financial shares suffered heavy declines across the region as investors questioned banks' potential vulnerability to any debt crisis.

Earlier, London's FTSE index of leading shares closed 3.18 percent lower after having been forced to suspend trading for three and a half hours due to a technical hitch.

Frankfurt's DAX index fell 3.25 percent and in Paris the CAC closed 3.41 percent lower, with major banks suffering all round. In Paris Societe Generale shed 5.48 percent to 45.62 euros.

Markets in Singapore, Kuala Lumpur and Jakarta were closed on Friday for a public holiday.

Hong Kong gold prices meanwhile tumbled to close at 1,145.00-1,146.00 US dollars an ounce, sharply down from Thursday's close of 1,187.50-1,188.50 dollars.

Gold had opened at 1,186.00-1,187.00 US dollars. The precious metal had struck a record 1,195.13 US dollars per ounce in trading on the London Bullion Market Thursday.

- AFP/ir