US stocks plunge on Dubai’s debt woes

NEW YORK - US stocks slumped during a shortened trading day Friday amid a debt crisis in Dubai that sparked similar sell-offs in other world markets.

Bank of America warned that the troubles of state-owned business conglomerate Dubai World could spark a wider debt crisis in the city-state, which in turn could have serious repercussions for developing countries that rely on capital inflows from Dubai.

Dubai’s government is backing a restructuring of Dubai World, which Wednesday night said it asked for a debt moratorium that would protect it from creditors until May.

There is a risk that Dubai’s debt crisis could “escalate into a major sovereign default problem, which would then resonate across global emerging markets in the same way that Argentina did in the early 2000s or Russia in the late 1990s,” Bank of America wrote in a report, cited by Bloomberg News.

In the US , there were also jitters as shoppers flocked to stores around the country on the first day of the holiday shopping season.

“Black Friday,” the day after the Thanksgiving holiday, usually marks the day when retailers move from the red into the black. But retailers are especially anxious this year as consumers look to save money with the US recovering from a deep recession.

The blue-chip Dow Jones Industrial Average plunged 154.48 points, or 1.48 percent, to 10,309.92. The broader Standard and Poor’s 500 Index slumped 19.14 points, or 1.72 percent, to 1,091.49. The technology-heavy Nasdaq Composite Index tumbled 37.61 points, or 1.73 percent, to 2,138.44.

Friday’s losses pushed US stocks into the red for the shortened trading week. The New York Stock Exchange was closed Thursday for the Thanksgiving holiday and was shut down three hours early Friday.

The Dow was down 0.22 per cent for the week, the S&P 500 lost 0.31 percent and the Nasdaq fell 0.85 percent.

The US currency climbed against the euro to 66.86 euro cents from 66.06 euro cents on Wednesday. The dollar climbed against the Japanese currency to 86.77 yen from 87.34 yen Wednesday.