Wall Street tumbles on Dubai fears

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By Joseph Weber

UPDATED:

U.S. markets fell sharply Friday following news that Dubai World, a government-investment company, is having trouble paying roughly $60 billion in debt.

In afternoon trading, the Dow Jones Industrial Average was down 154 points, or 1.48 percent, to 10,310 points. The broader Standard & Poor's 500-stocks index was at 1,091, down 19.14 points, or 1.72 percent; and the tech-heavy NASDAQ was down 37.61 points, or 1.73 percent, to 2,138.

The Dow was down as many as 197.86 points when U.S. markets opened, and the three major markets each had lost roughly 2 percent.

On Wednesday, Dubai World asked creditors if it could postpone forthcoming payments until May.

U.S. markets were closed Thursday for the Thanksgiving holiday.

European markets lost roughly 3 percent Thursday on fears the company would default, then stabilized Friday.

Britan's FTSE 100 index was up 0.4 percent; Germany's DAX rose 0.5 percent; and France's CAC-40 was up 0.7 percent.

Asia markets posted declines Friday.

Hong Kong's Hang Seng index declined 4.8 percent and South Korea's the Kospi, dropped 4.7 percent. The Nikkei 225 index in Japan and the Taiex in Taiwan each fell 3.2 percent.

The news about Dubai resulted in concerns about the possibility of a collapse similar to the one in September 2008 at the Wall Street investment bank Lehman Brothers Holdings Inc. It was the largest bankruptcy filing in U.S. history.

"It's obviously a concern if markets all over the world have been hit hard," said Brian Lipps, a branch manager for Charles Schwab & Co. in the Washington, D.C., area. "Also, it's the only news out there today."

However, the light trading Friday will exaggerate changes and the "true effect" will not be realized until next week when most traders return to work, he said.