* Stocks recover as Dubai contagion fears recede
* UAE's central bank offers emergency support
* South Korean authorities pledge vigilance
* Yen falls from 14-year highs, dollar weak
* UAE shares dive as markets open for first time after
crisis
By Umesh Desai
HONG KONG, Nov 30 (Reuters) - Asian stocks recovered after
last week's steep sell-off over the Dubai debt crisis on
growing speculation the fallout from a potential default will
be limited, while assurances from various authorities also
helped calm nerves.
European stock index futures pointed to a higher open,
futures for the Eurostoxx 50 <STXEc1>, German DAX <FDXc1> and
French CAC <FCEc1> gaining 0.3-0.4 percent.
Banking shares, which bore the brunt of the selling on
Friday on worries about banks' exposure to Dubai World and
property group Nakheel, were at the forefront of Monday's
rebound in Asia.
"I think it's going to be okay. At the end of the day Dubai
and Abu Dhabi need each other. And there will be a lot of
pressure on Abu Dhabi to step in, from the neighbouring
countries," Templeton Asset Management fund manager Mark Mobius
told Reuters.
Hong Kong shares, which posted their biggest single day
loss in eight months on Friday, and stocks in Japan, which
ended last week at a four-month low, were among the strongest
performers in the region on Monday.
In South Korea, the government pledged it will stay
vigilant while a top Indonesian central banker said there would
be no fallout from Dubai's debt problems on Southeast Asia's
biggest economy.
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.
The MSCI index of Asia Pacific stocks traded outside Japan
<.MIAPJ0000PUS> rose 2.8 percent while the Thomson Reuters
index of regional shares <.TRXFLDAXPU> was 2.6 percent higher.
Reflecting some of the calm, U.S. stock futures <SPc1> are
up 0.4 percent pointing to a firm start at Wall Street, which
had already started showing some signs of a recovery on Friday
having erased some of the losses towards close.
However, stocks in the United Arab Emirates, trading for
the first time since the call for a delay in repaying billions
of dollars in debt, dived with Dubai's index <> down 6.9
percent and Abu Dabhi's share benchmark <> 8.1 percent
lower.
The dollar surrendered some of last week's gains against
other major currencies and the yen retreated from a 14-year
high hit last week. The two units rose sharply last week as
fears of a possible Dubai debt default led to unwinding of
carry trades.
AUTHORITIES SOOTHE NERVES
Investors were also placated by authorities' moves to
prevent any major fallout from a looming debt default by two of
Dubai's flagship firms.
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. [].
On Sunday, the United Arab Emirates offered banks emergency
support to ease fears in financial markets although analysts
say the move to inject liquidity into Dubai's banks by the
central bank, together with promises by neighbouring city-state
Abu Dhabi to provide selective support, was the bare minimum
they could do.
In Seoul, Vice Finance Minister Hur Kyung-wook said the
government would maintain a daily monitoring system until the
Dubai incident was resolved.
Indonesia's central bank deputy governor said the country
is not expected to feel any fall-out from Dubai's debt problems
while the Philippine central bank governor said the crisis was
not seen having a major impact on remittances from the Filipino
diaspora.
About a tenth of the Philippines' 91 million people live
and work abroad and their remittances are vital to domestic
spending.
Investors also took heart from Wall Street's truncated
losses, raising hopes the flight to less risky assets seemed to
be subsiding. U.S. stocks recovered slightly towards close
after a slide of more than 2 percent at the open.
"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.
BANKS LEAD REBOUND
Leading the recovery were bank and construction shares,
which were the big losers last week as investors cut exposure
to sectors most vulnerable to economic uncertainty.
HSBC Holdings <0005.HK>, which fell 7.59 percent to close
at a three-week low on Friday, climbed over 4 percent. Standard
Chartered <2888.HK>, which fell as much as 8.9 percent to a
seven-week low last Friday, was also more than 4 percent
higher.
Britain's HSBC <HSBA.L>, Europe's biggest bank, has the
biggest exposure to the UAE, according to end-2008 estimates by
the Emirates Banks Association.
The MSCI index of banking shares in Asia Pacific outside
Japan <.MIAPJFN00PUS> was up 3.7 percent while the materials
index <.MIAPJMT00PUS> was 3 percent higher.
But stocks with exposure to Dubai continued to suffer.
These included Singapore's DBS Group <DBSM.SI> and City
Developments <CTDM.SI>, Indonesian property firm PT Bakrieland
Development <ELTY.JK> and Malaysia's LCL Corp <LCLC.KL>.
Japan's Nikkei average <>, which hit a four-month
closing low last Friday, gained 2.9 percent as the yen's fall
from a 14-year high against the dollar also lifted exporters.
(Additional reporting by Parvathy Ullatil in HONG KONG and
Elaine Lies in TOKYO; Editing by Kazunori Takada)
((umesh.desai@thomsonreuters.com; +852 2843 6935; Reuters
Messaging: umesh.desai.reuters.com@reuters.net; ))
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