* Dubai debt worry ripples across markets
* World stocks lower, emerging markets down 1 percent
* Dollar rises after hitting 14-year low against yen
By Jeremy Gaunt, European Investment Correspondent
LONDON, Nov 26 (Reuters) - Debt problems in Dubai hit global
stocks, helped lift bonds and took the dollar away from a
14-year low against the yen on Thursday.
Gold climbed to a new record high before falling back as the
dollar rose.
Banking stocks came under pressure because of potential
exposure to any bad debt in the region, as did shares in
European car companies, some of which are part-owned by Gulf
sovereign wealth funds.
Markets were trading without much input from the United
States, where it was the Thanksgiving holiday.
Dubai said on Wednesday it was asking creditors of Dubai
World and property group Nakheel to agree a debt standstill as
it restructures Dubai World, the conglomerate that spearheaded
the emirate's breakneck growth. []
The announcement triggered widespread concern about the
once-booming Gulf region's financial health, although some
investors differentiated between leveraged Dubai and other more
solidly wealthy emirates and countries in the region.
But the worries added to general nervousness in financial
markets about the real state of the world economy at a time when
investors are also seeking to lock in 2009 profits.
"The Dubai story is weighing heavily on stock markets and
people are looking to safe havens so there's some flight to
quality again," said Charles Berry, a bond trader at LBBW.
Others, such as Royal Bank of Scotland, said Dubai's
bombshell meant investors would now have to "re-appraise the
quality of sovereign support for state-owned entities in the
region."
Dubai eased some concerns about international port operator
DP World <DPW.DI>, saying its debt was not included in the
restructuring.
MSCI's emerging market stock index <.MSCIEF> was down more
than 1 percent, underperforming the broader all-country world
index <.MIWD00000PUS>, which was down 0.7 percent.
There were sharp losses in Europe, where the pan-European
FTSEurofirst 300 index <> fell more than 2 percent.
Banks were the biggest drag on the index, but the
interlinking of world finance showed up elsewhere.
Shares in London Stock Exchange <LSE.L> fell as traders
cited concern that Bourse Dubai held a substantial stake in the
company
Porsche <PSHG_p.DE> and Daimler <DAIGn.DE> also lost. Qatar
Investment Authority holds a 10 percent stake in the former,
Aabar Investments from Abu Dhabi and Kuwait own 9.1 percent and
6.9 percent stakes, respectively, in the latter.
YEN ASCENDANT
The dollar rebounded from a 14-year low against the yen as
traders betting against the dollar seized on the broad risk
reduction prompted by Dubai's debt problems to cash in on its
recent slide.
"Recent news in emerging markets has reverberated around the
market. While much of the moves are going to occur in rates and
credit markets, it is also being reflected in stock markets and
foreign exchange," said Lauren Rosborough, senior strategist at
Westpac in London.
The dollar's earlier fall against the yen came in part
because Japan's deputy finance minister Yoshihiko Noda told
Reuters recent currency moves reflected dollar weakness and
Japan wasn't considering intervening now. []
Euro zone government bond prices were higher. Bund futures
rose to break out of a trading range that has been in place
since June.
(Additional reporting by Jamie McGeever and Simon Falush;
Editing by Ruth Pitchford)
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((jeremy.gaunt@thomsonreuters.com; +44 207 542 1028; Reuters
Messaging: jeremy.gaunt.reuters.com@reuters.net))
