By Sarah Turner, MarketWatch
LONDON (MarketWatch) -- Trading in U.K. shares was halted on Thursday due to a technical hitch, although before the suspension investors had been selling bank stocks amid worries about exposure to Dubai debt.
The London Stock Exchange (UK:LSE 786.50, -29.50, -3.62%) halted share trading in the morning, citing technical problems.
"All order-driven securities remain in an auction call period. Securities on the quote-driven market remain tradeable; however, market-maker prices are currently stale and therefore not firm," said the exchange.
The LSE's biggest shareholder is Borse Dubai, which holds a stake of around 20% in the exchange operator.
Dubai was in the news on Thursday after conglomerate Dubai World sought to delay debt payments. The company, the largest corporate entity in Dubai, has around $60 billion of liabilities and will seek a six-month "standstill" on debts with all lenders, news reports said.
"The Middle East region is unlikely to be more than 1% to 2% of banks' exposures and Dubai would be a small portion of this: we believe European banks we cover could have exposure of 13 billion euros," said analysts at Credit Suisse.
"A 50% loss on the exposure would be equivalent to a 5% increase in provisions in 2010, or a hit of about 5 billion euros after tax," they added.
"For Standard Chartered (UK:STAN 1,547, +58.00, +3.61%) , MESA is a loan book of around $18 billion, or around 10% of group loans, but this includes the following countries: Afghanistan, Bahrain, Bangladesh, Egypt, Jordan, Lebanon, Oman, Pakistan, Qatar, Sri Lanka, United Arab Emirates. So Dubai exposure is likely to be significantly less than this," they said.
"For HSBC Holdings (UK:HSBA 709.10, -27.20, -3.67%) (HBC 62.07, +0.75, +1.22%) , their Middle East loan book is around $25 billion, or around 3% of group," they said. The group discloses that UAE accounts for $16 billion, or around 2% of group loans, the analysts added.
In other banking-sector news, the U.K. government said it will move swiftly to implement reforms proposed by David Walker in his review of pay and governance at banks. See full story.
Shares were lower in Continental Europe on Thursday, a day when U.S. markets are closed for the Thanksgiving holiday. The German DAX index was down 1.8% at 5,699.50 and the French CAC-40 index was off 1.9% at 3,736.97. See Europe Markets.
