Shares of leading property developers and financial companies in the Emirates went into a freefall dropping more than 8% on the stock market four days after debt ridden Dubai World conglomerate asked for suspension of repayment of its whopping  loans.

Dubai's main stock exchange dropped more than 7% and neighbouring Abu Dhabi's markets crashed by more than 8% hit by lack of buyers on the first day of trading since the officials went public on the financial woes of the company.

The financial turmoil in the Gulf was compounded when the Dubai government said that it does not guarantee debts of the embattled company. This announcement is made by head of the Dubai's finance department, Abdulrehman al-Saleh.

Nakheel, part of the debt loaded Dubai World conglomerate today asked for suspension in trading of all its (Sukuks) Islamic bonds as the trading open after a four day break for Eid.

Shares of the Dubai World conglomerate were the worst sufferers falling nearly by 15% in early trading. Dubai's benchmark DFM index closed at 1,940.36 points, down by 152.80 points.

Other Emirates leading construction and financial companies saw their shares plunge by a maximum 10 points. Most other companies trading in the market were also in the red.

Apparently to ward off the possibilities of a run on the banks in the Gulf - many of which are sharing big chunks of Dubai's $80 billion debt - the UAE's central bank pledged to stand behind foreign and domestic banks. The bank said it will offer special additional liquidity facilities, which will allow local banks to draw funds at half percentage less than the inter-bank offering rate.

The intervention by the UAE central bank came as rating agencies said that they have either downgarded or placed on review the banks in the Emirates. But even this did not ease the market.

Troubles of Nakheel seem to touch even UAE's biggest real estate developer Emaar Properties whose shares were down by over 9%. The Dubai-based Nakheel is in the process of merging with Emaar.

In what was widely expected, Dubai's master developer Nakheel has asked for a suspension in trading of all its Islamic bonds, the Nasdaq Dubai bourse said today.

"Nakheel has today asked for all three of their listed sukuks (Nakheel Development Limited, Nakheel Development 2 Limited, Nakheel Development 3 Limited) to be suspended until it is in a position to fully inform the market," NasdaqDubai said.

Nakheel was expected to repay some $3.5 billion in maturing sukuks on December 14. Shares fell across the board in Dubai with 14 out of 32 companies opening limit down while 17 out of 60 firms opened limit down in Abu Dhabi.

Indian businessmen in Dubai, however, remained unconcerned with the happenings. Senior industrialist, Ram Buxani, told PTI that the incident is being overplayed globally.

"Dubai has developed unparallelled infrastructure in such a short time and obviously has landed in overexposure but that should not raise any doubts on its capability to face (such crisis)," he said. According to him, Dubai has gone through many upheavals in the past and has emerged victorious. "Which other country has shown this much progress in just over three decades?" he said.

Meanwhile, officials from the Dubai government or Dubai World are expected to issue a statement after the UAE central bank moved to allay concerns about the banking sector by setting up an emergency liquidity facility yesterday.