* Oil prices extend previous day's decline to below $74
* Dubai struggles to ease debt default fears
* Data shows Japan mired in deflation
* Yen surges as Dubai woes put investors off risk
(Updates prices, adds analyst's comments)
By Fayen Wong
PERTH, Nov 27 (Reuters) - Oil prices extended their decline
from the previous day to a six-week low of below $74 a barrel
on Friday, as nervous investors, roiled by debt problems in
Dubai, pared positions and shifted to safe-haven assets.
Fears of a second financial storm also caused Asian stocks
to slump on Friday, as investors dumped shares in Asian banks
and builders, with stock markets in Tokyo and Hong Kong haunted
by suspicion of lenders' exposure to the Dubai firms.
[]
U.S. crude for January delivery <CLc1> stood at $73.94 a
barrel by 0747 GMT in electronic trading, down more than 5
percent from Wednesday's settlement. There was no settlement
price on Thursday because of the U.S. Thanksgiving holiday.
London Brent crude <LCOc1> fell $1.26 to $75.73.
The New York Mercantile Exchange will have a shortened
floor trading session on Friday.
"The Dubai situation is very worrying and people are
obviously worried about a potential domino effect if Dubai
can't pay off their debt," said Benson Wang, senior adviser at
Commodity Broking Services in Sydney.
"This episode has destroyed the confidence between
borrowers and lenders and it has also shaken the confidence
about the pace of a global economic recovery."
Dubai has asked creditors of two of its flagship firms for
a standstill on debt running into tens of billions of dollars
as part of restructuring Dubai World, sparking fears of debt
defaults that could hit other parts of the global economy and
derail the fledgling recovery from the global financial crisis.
[]
However, some analysts said oil's sharp decline on Friday
could have been exaggerated and needed to be weighed against
the thin volumes traded, due to the closure of some financial
markets in Asia for holiday.
Oil prices have so far fallen about 10 percent since
striking a year-high of $82 early last month, as lacklustre
economic data and bulging fuel inventories in the United States
combine to dent hopes of a swift recovery in energy demand.
With oil now trading below the $75 support level, some
analysts said prices risk falling towards the low of around $72
struck in mid-October.
"The overall supply and demand fundamentals will tell you
that oil prices should fall lower. So perhaps prices could head
closer to the $63 level. That's not impossible," said Tony
Nunan, an analyst at Mitsubishi Corp in Tokyo, adding that $63
was the 200-day moving average price for crude.
The flight to safe-haven assets kicked up the yen to its
highest level in 14 years against the dollar, although the
dollar index <.DXY> was still up 0.4 percent against a basket
of currencies. []
Adding to the grim economic news, the latest data from
Japan showed the consumer price index slid in the year to
October at its fastest rate since 2001, with increasing signs
of weak demand weighing on prices. []
(Editing by Clarence Fernandez)
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