Dubai Tries to Stem Panic as Financial Crisis Shakes Investors Around World
THE GUARDIAN: FTSE 100 opens down 70 points before regaining ground / Japan's Nikkei closes down 3.2%; Hang Seng falls 5.3%

The Dubai financial crisis continued to send shares and commodities falling around the world this morning, despite efforts by the emirate's ruling family to calm the panic.

In London, the FTSE 100 tumbled by 70 points, or nearly 1.4%, to 5123 when trading began – but by 9.15am had erased nearly all of its losses. HSBC and Barclays were among the biggest fallers, along with mining companies.

There was also a bout of heavy selling in Asia. The Nikkei 225 closed 3.2% lower, with Japan's biggest banks leading the fallers. Hong Kong's Hang Seng index fell by 5.3%.

Major building firms in Asia also fell sharply, as traders anticipated that the Dubai building boom was over.

Predictions that Dubai could drag the world economy downwards again knocked $5.50 off the price of a barrel of oil, to $72.49.

Yesterday the FTSE 100 suffered its worst day's trading since March, falling by 170 points. This followed the news that Dubai World – the government-owned conglomerate that has led the dramatic growth in the Emirate – has asked to defer repaying some debts for six months.

It is still unclear whether Dubai World will default on its $80bn debts, which would be a major blow to the banking sector, or be bailed out by the United Arab Emirates.

Sheikh Ahmed bin Saeed al Maktoum, the uncle of Dubai's ruler Sheikh Mohammed bin Rashid al Maktoum, attempted to calm the situation last night. >>> Graeme Wearden | Friday, November 27, 2009

China Slashes Interest Rates as Panic Spreads
THE TELEGRAPH: The People's Bank of China cut interest rates by more than 1pc point as the economy crumbles and millions of jobs are predicted to go ahead of Christmas.

The move came just one day after the World Bank predicted that China would grow by 7.5pc next year. The level of growth may appear robust by Western standards, but it would represent the slowest economic expansion in China for the last two decades.

It is also perilously close to the 7pc minimum level of growth that Chinese economists believe is necessary in order to create enough jobs for the 6m university graduates who will enter the jobs market next year.

It is the fourth interest rate cut from the Chinese central bank in the last ten weeks as the government desperately battles an evident economic collapse. "China is out to save itself here," said Patrick Bennett, an analyst with Societe Generale in Hong Kong.

The PBOC reduced its main borrowing rate by 1.08pc points to 5.58pc, the biggest one-off cut since the Asian Financial Crisis in 1997.

In recent weeks, a series of riots across central and southern China have flowered as disgruntled employees aired their grievances at the downturn.

Today, around 500 protesters rioted at the Kai Da toy factory in Dongguan in the Pearl River delta, flipping over a police car and trashing computers in a dispute over payoffs to 80 fired workers. Tens of thousands of factories across the region have already shut their gates.

Yin Weimin, China's Social Security minister, has revealed that employment is the Communist Party's number one concern in the downturn and said the "situation is critical". Unemployment is expected to rise from 4pc to 4.5pc by the end of the year and anecdotal reports have suggested that 3m people have already been fired in the industrial province of Zhejiang alone. >>> By Malcolm Moore in Shanghai | November 26, 2008

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