Dubai World says it's holding constructive talks with creditors on restructuring By Polya Lesova, MarketWatch FRANKFURT (MarketWatch) -- Equities in Dubai and Abu Dhabi fell sharply for a second session on Tuesday, with investors continuing to worry about Dubai World's debt troubles, even as the conglomerate said it's holding constructive talks with its creditors. Other markets in the Middle East also sold off, with Qatar's benchmark equity index falling more than 8%. Dubai World, a sprawling conglomerate owned by the government of Dubai, stunned investors last Wednesday when it announced it was seeking a standstill on its debt. The company's debt woes triggered steep declines in the Dubai and Abu Dhabi stock markets on Monday. Investors continued to sell stocks on Tuesday. In Dubai, the main stock index ended down 5.6% to 1,831 points. Of 26 securities that traded, 22 posted losses. "With banks and real-estate developers making up more than 75% of investable market cap, U.A.E. markets offer few places to hide," said Andrew Howell and other strategists at Citigroup in a research note. "Dubai looks most vulnerable, although Abu Dhabi stocks are also at risk given the exposure of Abu Dhabi banks to Dubai entities," they wrote. Volatility could be sharpened since it is a short holiday week in the United Arab Emirates. Real-estate shares in Dubai dropped 9.2%, leading the market lower. Financial stocks fell 7.5%, while utilities dropped 6.4%, according to the Web site of the Dubai Financial Market. In the real estate sector, property developer Emaar Properties and construction firm Arabtec Holding both dropped 10%. Drake & Skull International, an engineering and contracting company, fell 6.6%. Property group Deyaar Development sold off 6.2%. In the financial sector, Dubai Islamic Bank dropped 8.6% and Shuaa Capital ended down 9.8%. The Dubai Financial Market will be closed starting from Wednesday because of the National Day of the U.A.E. The market will resume working on Sunday. In Abu Dhabi, the General stock index dropped 3.6% to 2,573 points, paring some of its earlier losses. Real-estate stocks dropped 9.8%, while construction shares fell 6.5%. Shares of DP World, (DPWRF 0.44, +0.01, +2.33%) a subsidiary of Dubai World, rebounded 5% on Nasdaq Dubai after tumbling 15% in the previous session. Elsewhere in the region, Qatar's main stock index tumbled 8.4% to 6,592 points on Monday, the first trading day for the market since Nov. 25. Shares of Commercial Bank of Qatar dropped 10%, while Doha Insurance fell 9.5%. Kuwait's benchmark equity index fell 2.7% to 6,745 points. Shares of investment companies fell 4%, while real estate stocks dropped 3%.

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