World - Dubai shares hit despite promises

Dubai's stock market has fallen 5% to the lowest in four years, despite the emirate's efforts to assure investors that it can meet debt obligations.

The head of Dubai's economic taskforce, Mohammed al-Abbar, said the government owed $10bn (£6.6bn), while state-affiliated firms were $70bn in debt.

However, he said both the government and state companies had assets worth much more than their debts.

Dubai's government recently bailed out two lenders hit by the credit crisis.

"We are rationalising our expenditure and consolidating our activities", said Mohammed al-Abbar.

Turbulence

Emaar, the state-controlled property firm of which Mohammed al-Abbar is also chairman, was one of the biggest losers on Monday, dropping another 9% to its lowest level since being listed eight years ago.

Dubai, unlike other Arab regions, does not have strong oil resources. Instead it has tried to become a regional trade and tourism hub, but its efforts have been hit by the global financial crisis.

On Sunday, Saudi Arabia cut a key interest rate and took steps to boost banks' liquidity.

The entire Gulf region has been affected by the economic downturn and a huge fall in oil prices, a key export.

Oil prices are around two thirds lower than they were in July when they hit a record above $147 a barrel.