Shares in UAE slump in first hours of trading since Dubai World revealed it needed an extension on repaying debts

Stock markets in Dubai and Abu Dhabi nosedived this morning as trading opened for the first time since state-owned Dubai World asked for an extension on repaying its debts.

Dubai's Financial Market Index slumped 6.9% to 1,948.83 in the first hour of trading, while shares in the Abu Dhabi Securities Exchange fell 7.4%.

Yesterday, the central bank of the United Arab Emirates said it would provide extra liquidity to all UAE banks and to any foreign banks operating in the region.

The Abu Dhabi government has also said it will give financial help to Dubai but insisted this will be on a “case-by-case basis” rather than a promise to underwrite all its neighbour's debts.

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