UAE markets track downwards amid global downgrade warnings

Markets Update: Moody's Investor Service warns it may downgrade up to 114 financial institutions as concerns linger over Europe's debt crisis, causing markets to decline on early trading.

Moody's Investor Service warned it may downgrade the ratings of 114 financial institutions in 16 European countries, as concerns linger over the region's debt crisis.

The agency is reviewing the long-term ratings and standalone credit for an array of lenders including Barclays, BNP Paribas, Credit Agricole, Deutsche Bank, HSBC Holdings and Goldman Sachs. Moody's said it was also looking at institutions that have global capital market operations such as UBS, Credit Suisse and Morgan Stanley.

"While there are mitigating factors such as the currently supportive stance of many governments towards their banking systems and accommodative monetary policies, these are overshadowed by the aforementioned pressures," Moody's said.

"Moody's expects that once the reviews announced today are resolved, its E.U. bank ratings will fully reflect the effects of currently foreseen adverse credit drivers."

The potential downgrades would hike borrowing costs for lenders, who are already grappling with expensive funding in a risky environment. Markets were jittery on Thursday, amid concern that Greece will default on a debt payment.

The euro lost 0.3 per cent against the dollar to trade at 1.3017.

In Asia, Japan's Nikkei 225 Index declined 0.2 per cent to 9238.10 points. The Hong Kong Hang Seng Index declined 0.5 per cent to 21,238.64 points.

In the UAE, the Abu Dhabi Securities Exchange declined 0.2 per cent to 2481.44 points, while the Dubai Financial Market General Index lost 0.5 per cent to 1515.26 points.

Elsewhere in the Gulf region, Kuwait's measure slipped 0.1 per cent to 5957.60 points. Bahrain and Oman indexes were unchanged at 1142.43 points and 5636.86 points. Qatar's QE Index lost 0.7 per cent t 8630.28 points. The Saudi Tadawul was closed for the day.