Dubai debt worries linger, Gulf stocks suffer

Dubai's government said on Monday it was not responsible for the debts of its flagship conglomerate, offering little clarity on a plan to delay billions in debt repayments that has rattled world markets.

Dubai last week raised fears of a second bout of global financial turmoil by asking for a six-month repayment freeze on debt issued by Dubai World and its unit Nakheel, a property developer at the heart of the emirate's boom.

Analysts said a statement by Dubai's leading finance official shed little light on how much investors could lose in the process. Financial markets in Europe continued to slide afterwards.

"Creditors need to take part of the responsibility for their decision to lend to the companies. They think Dubai World is part of the government, which is not correct," said Abdulrahman Saleh, director general of Dubai's department of finance.

Saleh told Dubai TV that banks did not need extra liquidity and that the market reaction to Dubai World's restructuring had been overblown.