Dubai’s shares snapped a five-day rally, leading a drop among Persian Gulf markets, as optimism that the bailout of Spain’s banks will stem Europe’s financial crisis faded, cutting demand for riskier assets.
Emaar Properties PJSC (EMAAR), developer of the world’s tallest skyscraper in Dubai, fell 1 percent. Arabtec Holding (ARTC) PJSC, the United Arab Emirates’ largest construction company, dropped the most in more than a week. The benchmark DFM General Index (DFMGI) decreased 1 percent, the biggest retreat since June 3, to 1,468.82 at the 2 p.m. close in the emirate. The Bloomberg GCC 200 Index (BGCC200) and Saudi Arabia (SABIC)’s gauge declined 0.9 percent.
Spanish bond yields surged the most in four months yesterday in the first trading after the government sought a bailout of 100 billion euros ($125 billion) for its banks. European officials have struggled to control the debt crisis that began in Greece at the end of 2009. The MSCI Emerging Markets Index (MXEF) retreated as much as 1 percent, while the Standard & Poor’s 500 Index yesterday lost 1.3 percent in New York. Futures rose 0.4 percent today.
“Our markets are far more correlated to global markets on the downside, as nobody knows the repercussions from a real fallout in the event that the euro zone collapses,” said Haissam Arabi, chief executive officer of Gulfmena Investments in Dubai. “There is great uncertainty and many investors feel they are better off on the sidelines, especially as the summer months are here.”
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