Asian markets rebound sharply after UAE pledges support for banks; European shares fall

Asia stocks up after UAE backs banks; Europe down

HONG KONG — Asian stock markets rebounded Monday from their steep fall last week after the United Arab Emirates moved to contain the fallout from Dubai’s debt crisis. European markets were lower.

Major Asian markets jumped about 3 percent or more after tumbling on Friday amid fears Dubai’s debt problems could lead to more financial instability and were a sign of hidden trouble elsewhere in a still fragile world economy.

The UAE’s central bank helped soothe investor fears, at least for now, by pledging Sunday to make extra funding available to all banks in the country, including foreign institutions with local branches.

However, the bank’s announcement, aimed at shoring up confidence and averting a bank run, did not mention any specific help for Dubai. The beleaguered emirate, which splurged on flashy developments and other investments during the credit boom, said last week it now needed at least a six-month reprieve from paying some of its roughly $60 billion debt.

In its first day of trade since last week’s bombshell, Dubai’s stock exchange dropped nearly 6 percent on Monday.

A number of analysts said Dubai’s woes were unlikely to create a global contagion even if some of its creditors got stuck with losses. Exposure to Dubai is believed to be greatest among European banks and fairly insignificant among most Asian companies.

“Definitely the market overreacted,” said Mixo Das, an Asia analyst at Nomura International in Hong Kong. “That sort of sell off was definitely not called for.”

As trading started in Europe, Britain’s FTSE 100 was down 0.4 percent, Germany’s DAX lost 0.7 percent and France’s CAC-40 fell 0.9 percent. Wall Street futures pointed to a slightly higher open in the U.S. Monday. Dow futures were up 13, or 0.1 percent, at 10,305 and S&P futures gained 1.8, or 1.7 percent, to 1,091.20.

Nearly every market traded higher in Asia, with Japan’s Nikkei 225 stock average climbing 264.03 points, or 2.9 percent, to 9,345.55. Hong Kong’s Hang Seng added 687.00 points, or 3.3 percent, to 21,821.50 and South Korea’s Kospi added 2 percent to 1,555.60. Both those markets tumbled nearly 5 percent on Friday.

Elsewhere, Shanghai’s market climbed 3.2 percent, Australia’s index was 2.8 percent higher and Taiwan’s benchmark rose 1.2 percent.

In India, the stock market was 2 percent higher after the government said the country’s economy grew 7.9 percent last quarter, far exceeding expectations.

Among stocks, banks hit especially hard during last week’s selling were stronger in Asia, with London-based lenders HSBC and Standard Chartered up more than 4 percent in Hong Kong. Both have exposure in Dubai, though analysts suggest any losses would likely be manageable.

Asia’s turnaround followed Europe, where markets recovered Friday.

Uncertainty surrounding Dubai’s fate sent Wall Street lower, though the losses were less than other markets.

The Dow on Friday fell 154.48, or 1.5 percent, to 10,309.92. The broader Standard & Poor’s 500 index fell 19.14, or 1.7 percent, to 1,091.49, and the Nasdaq composite index fell 37.61, or 1.7 percent, to 2,138.44.

Oil prices rebounded to near $77 a barrel in Asia as panic about the global fallout from Dubai’s debt problems abated. Gold lost 3.5 percent to $1,172 an ounce.

Benchmark crude for January delivery rose 38 cents to $76.43 in electronic trading on the New York Mercantile Exchange. The contract fell $1.91 to settle at $76.05 on Friday.

In currencies, the dollar fell to 86.12 yen from 86.65 yen. The euro was higher at $1.5039 from $1.5009.