* World stocks ease, with Dubai extending losses
* Euro off one-month lows; crude up on inventory drop
By Dominic Lau
LONDON, Dec 9 (Reuters) - Global equities dipped on
Wednesday with Japan leading the falls on concerns over the pace
of recovery, while crude oil prices recovered and the euro
bounced from a one-month low on bargain hunting.
Worries over Dubai's debt problems dampened risk appetite,
though the stock sell-off was limited outside the Gulf after
sharp losses in European and U.S. equities in the previous
session. Safe-haven government bonds were steady.
Also helping alleviate some concerns over banks' exposure to
Dubai, Asia-focused Standard Chartered <STAN.L> said any losses
it suffers in the emirate were unlikely to be material and it
was on track for a record profit this year. []
Dubai's benchmark <> index fell 6.4 percent, hitting a
more than eight-month low and leading emerging market shares
weaker, and the cost of insuring the emirate's debt against
restructuring or default rose sharply. Its five-year credit
default swaps rose nearly 50 basis points to 592.5 basis points,
according to monitor CMA DataVision.
The MSCI emerging equities index <.MSCIEF> lost 0.5 percent
and the MSCI All-Country World Index <.MIWD00000PUS> eased 0.1
percent, with Japan's Nikkei average <> down 1.3 percent
after a bigger-than-expected downward revision to Japanese
economic growth in the third quarter. []
In Europe, the FTSEurofirst 300 <> index was flat but
Greek bank shares <.FTATBNK> extended recent losses, down 2.6
percent after Fitch Ratings on Tuesday downgraded the country's
sovereign rating on fiscal deterioration. []
"Greece's debt problems are more of a nuisance than Dubai's
woes, because a number of European banks have stakes in local
lenders or are exposed to the country's debt, and it revives the
spectre of a domino effect in East Europe," said David Thebault,
head of quantitative sales trading at Global Equities in Paris.
"But overall, the risk is limited for European equities.
We've been retreating over the past few days, but stocks are
still moving in a range, although closer to the bottom of the
range. The chances of seeing a Christmas rally are intact."
StanChart shares advanced 3.4 percent.
U.S. stock index futures <DJc1> <SPc1> <NDc1> rose 0.3-0.5
percent, pointing to a recovery in Wall Street.
EURO RECOVERS
Greece's downgrade along with Dubai's debt crisis had
weighed on the euro, but the currency <EUR=> recovered from a
one-month low on Wednesday. The euro was up 0.3 percent at
$1.4747 after a three-day of decline against the dollar.
"While there is always the risk of another heavily-indebted
country being downgraded this year, such as Spain, Ireland or
Portugal, it looks like the euro will now stabilise at around
$1.4700," said Stuart Bennett, senior fx strategist at Calyon in
London.
The U.S. currency fell 0.4 percent to 88.01 yen <JPY=>.
Worries about Britain's fiscal health continued to pressure
sterling, which dipped below the $1.62 mark for the first time
since mid-October ahead of finance minister Alistair Darling's
pre-budget report at 1230 GMT.
Oil prices <CLc1> recovered to above $73 a barrel, supported
by industry data showing a big drop in U.S. crude stocks and a
Saudi Arabian assurance over the strength of Gulf economies.
Gold <XAU=> edged off three-week lows as the dollar failed
to retain gains.
Yields on benchmark 10-year U.S. Treasuries <US10YT=RR> were
up 1 basis point at 3.399 percent, while those on 10-year Bund
<EU10YT=RR> were down 1 basis point at 3.146 percent.
The spread between 10-year Greek government bonds and
benchmark German Bunds widened further, while the cost of
protecting Greek government debt against default also rose, with
the five-year credit default swap reaching 226.8 basis points
from 209 basis points, CMA DataVision said.
(Additional reporting by Blaise Robinson, Naomi Tajitsu, Emelia
Sithole-Matarise, Tamawa Desai and Carolyn Cohn; Editing by Toby
Chopra)
