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* Stocks recover as Dubai contagion fears recede
* South Korean authorities pledge vigilance
* Yen falls from 14-year highs, dollar weak
By Umesh Desai
HONG KONG, Nov 30 (Reuters) - Asian stocks made a tentative
recovery after last week's steep sell-off over the Dubai debt
crisis as investors nerves steadied on hopes that the fallout
of a potential default will be limited.
South Korean stock and currency markets received an
additional boost from the government's pledge to stay vigilant
while a marginal pullback towards close at Wall Street also
helped the recovery.
The dollar resumed its weakening trend surrendering its
gains against big currencies last week, while the yen retreated
from a 14-year high hit last week.
"Our feeling has been that this would not lead to contagion
and that markets did not react rather nervously at the outset,"
said who oversees about $11 billion as Asia-Pacific chief
executive of RCM, a unit of Allianz Global Investors.
In Seoul, Vice Finance Minister Hur Kyung-wook said the
government would maintain a daily monitoring system until the
Dubai incident was resolved.
South Korean markets have been especially sensitive to
international financial instability mainly because the highly
leveraged local banking system is heavily exposed to the global
credit market situation.
On Friday U.S. stocks recovered slightly towards close
after a slide of more than 2 percent at the open with the
flight to less risky assets seemed to be subsiding.
"The fall in U.S. stocks wasn't as bad as expected and that
has lifted one of the biggest Dubai-related concerns, given
that worries about that don't seem to be as bad as they once
were," said Masayoshi Okamoto, head of dealing at Jujiya
Securities.
Financial markets shuddered last week after Dubai said it
would ask creditors of state-owned Dubai World and Nakheel, the
builder of its palm-shaped islands, for a standstill agreement
as a first step toward restructuring billions of dollars of
debt. [].
The MSCI index of Asia Pacific stocks traded outside Japan
<.MIAPJ0000PUS> was up 2.3 percent while the Thomson Reuters
index of regional shares <.TRXFLDAXPU> was 2.2 percent higher.
Leading the recovery were bank and construction shares,
which were the big losers last week. The MSCI index of banking
shares in Asia Pacific outside Japan <.MIAPJFN00PUS> was up 2.9
percent while the materials index <.MIAPJMT00PUS> was 2.7
percent.
Japan's Nikkei average <>, which hit a four-month
closing low last Friday, was up 2.4 percent as the yen's fall
from a 14-year high against the dollar lifted exporters.
(Additional reporting by Elaine Lies in TOKYO; Editing by Jan
Dahinten)
((umesh.desai@thomsonreuters.com; +852 2843 6935; Reuters
Messaging: umesh.desai.reuters.com@reuters.net; ))
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