Frankfurt - European stock markets managed to regain a measure of composure Friday, clawing back big losses run up the previous day after Dubai's debt problems provoked fears of a financial crisis in the Middle East. By midday trading, Europe's blue-chip Stoxx 50 index had slipped 0.2 per cent to 2436 after concerns about several key European companies' exposure to Dubai sent their shares into a tailspin on Thursday.
The more stable European share trading came despite stock markets across Asia plummeting on Friday in the wake of of Dubai World, a government-owned investment company in the Gulf emirate, asking creditors for a six-month extension on debt repayments.
However, several European company stocks remained under pressure Friday including the German construction group Hochtief and carmaker Daimler.
But underscoring the nervousness among investors caused by Dubai debt woes, shares on Europe's premier stock market in London fell by around 1.5 per cent in early trading Friday.
The Financial Times (FTSE) index, which tumbled by more than 3 per cent on the news late Thursday, recovered later to stand at 0.5 per cent lower than Thursday's close.
Frankfurt's DAX was down just 0.1 per cent at 5610 in midday trading amid a brittle investment mood. However, the Paris bourse managed to climb back into positive territory.
However, share trading in emerging markets also remained skittish with stocks in both Moscow and Warsaw down more than 1 per cent in Friday midday trading.
Meanwhile in Tokyo, the benchmark Nikkei 225 Stock Average index was down 301.71 points, or 3.22 per cent, to close at 9,081.52, a four-month low, while the broader-based Topix index lost 18.55 points, or 2.24 per cent, to end the week at 811.01.
For Japanese titles, the bad news from the Middle East was compounded by the yen strengthening against the dollar, climbing to a 14-month high.
The Dubai government has authorized the restructuring of Dubai World, which has asked its creditors if it can postpone its payments until May.
This sparked fears of a potential default and questions over the exposure of banking companies to its debt. Consequently, banking titles figured prominently among Friday's losers.
"The debt-servicing problems surfacing in Dubai have sent jitters through the markets across Asia, Europe and back home which were deep in the red," said Dinesh Thakkar, the head of Mumbai-based Angel Broking.
However, Indian markets recovered some ground Friday after severe losses earlier in the day due to fears of a debt default by Dubai World.
The Bombay Stock Exchange's Sensex index dropped sharply after opening and had slid nearly 4 per cent during afternoon trade. The 30-share index however recoverd slightly closed at 16,632.01, a loss of 1.32 per cent, or 222.92 points.
But in China, the Shanghai SE Composite index was down 2.36 per cent to 3,096.26 and the Shenzen Component index slumped 3.09 per cent, or 411 points, to close at 12,876. Hong Kong's Hang Seng Index fell 1,075.91 points, or 4.84 per cent, to close at 21,134.5, its lowest level for three weeks.
Shares in HSBC Holdings Plc and Standard Chartered Plc fell by more than 7 per cent and 8 per cent respectively amid fears that they may be exposed to the potential financial turmoil in the emirate.
The Dubai debt problem showed the global economic recovery was not stable and might trigger a series of problems if the city state should turn out not being unable to pay the debt, said Guo Tianyong, director of the China Bank Research Center at China's Central University of Finance and Economics.
