LONDON, November 26, 2009 (AFP) – Global equities slumped Thursday, with Europe down three percent after Dubai’s shock call to suspend the debt of a key state company fuelled anxiety about excessive public borrowing, analysts said. The government of Dubai shocked financial markets on Wednesday when it said it would ask creditors of its Dubai World conglomerate for a debt moratorium of at least six months.
The request “fed a climate of insecurity and crisis of confidence at a time when fears are mounting about excessive public debt,” said Xavier de Villepion, an analyst with Global Equities in Paris.
London’s FTSE index of leading shares closed 3.18 percent lower at 5,194.13 points. The market was earlier forced to suspend trading for three and a half hours due to a technical hitch.
Frankfurt’s DAX index fell 3.25 percent to 5,614.17 points and in Paris the CAC closed 3.41 percent lower at 3,679.23, with major banks suffering all round. In Paris Societe Generale shed 5.48 percent to 45.62 euros.
“If (Dubai) had given the debt markets more warning, then there would be less of a panic now,” David Morrison, an analyst at financial betting firm GFT, told AFP.
“It’s causing a mini flight-to-quality as US, Europea