Euro's slide goes far and wide

Markets Update: Local markets take a hammering as the euro's troubles mount.

The euro dropped below US$1.30 for the first time since January, to $1.2965. Daniel Roland / AFP

The UAE's markets fell as the euro took a hammering on world markets, dispelling any lingering optimism in the final hours of trading yesterday before a decision by MSCI whether to upgrade the Emirates to "emerging-market" status.

The Dubai Financial Market General Index fell 0.5 per cent to 1,385.07, while the Abu Dhabi Securities Exchange General Index fell 0.2 per cent to 2,442.82.

MSCI's decision on whether to upgrade the UAE and Qatar markets was due in the early hours of this morning, after The National went to press.

The most recent decision in June was postponed for six months to test the exchanges' market systems.

Before the announcement, exchange officials had signalled pessimism over the potential gains to be had by UAE markets.

Stocks that had risen on speculation that the UAE would secure an upgrade were hit hard.

"Global markets were weak yesterday and continue to be weak today," said Yong Wei Lee, a fund manager at Emirates NBD. "There's evidence of some profit-taking on companies like Emaar and Drake & Scull International, they've had a fairly decent run in the last week."

In the capital, Etisalat's shares fell 0.5 per cent to Dh9.51, their lowest since December 2009.

The euro dropped below US$1.30 for the first time since January, to $1.2965.

Many investors were deserting the euro after the "damp squib" of last weekend's euro-zone summit and the lack of agreement among European leaders, said Neil Mellor, a currency strategist at BNY Mellon.

"People were genuinely convinced that they'd be able to pull something out of the hat," he said.