European default fears shake investors

Local markets drop on Eurozone debt worries.

Tamweel was down 2.2 per cent to 80 fils a share.

Dubai shares fell to their lowest in a week as Europe's debt woes continued to worry investors.

Tamweel, the Islamic mortgage firm, was down 2.2 per cent to 80 fils a share. Emaar Properties lost 0.7 per cent to Dh2.83 and Deyaar Development, a Dubai developer, dropped 2.5 per cent to 27 fils a share.

The Dubai Financial Market General Index was down 0.4 per cent to 1,473.46 points, the lowest since last Tuesday.

"The only thing that's playing a role is the European debt crisis," said Haissam Arabi, the chief executive at Gulfmena Investments in Dubai. "There are fears of default, and our markets are strongly correlated, interest has subsided and liquidity is drying up." European markets dropped last week, with the Stoxx 600 Europe Index down 3.7 per cent after the German chancellor Angela Merkel's party suffered its fifth election loss this year as she faced criticism over the handling of the debt crisis. Jean-Claude Trichet, the president of the European Central Bank said last Thursday that threats to the euro region had worsened.

In the capital, Aldar Properties was down 1.6 per cent to Dh1.22 a share. Methaq Takaful Insurance was down 1.3 per cent to Dh1.51.

Elsewhere in the region: Kuwait's measure was up 0.3 per cent to 5,980.20; Bahrain's index was little changed at 1,270.87; Oman's index was down 0.4 per cent to 5,712.57; and Qatar's index was up 0.1 per cent to 5712.57. The Saudi Tadawul All-Share Index was little changed at 6140.79.