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Economy worries hit Gulf shares Economy worries hit Gulf shares
(about 2 hours later)
Shares in the oil-rich Gulf region have fallen sharply as investors worried about the impact of the global economic downturn on the region.Shares in the oil-rich Gulf region have fallen sharply as investors worried about the impact of the global economic downturn on the region.
Kuwait said legislation to guarantee deposits held in its banks would be introduced, prompting concerns about the state of financial institutions.Kuwait said legislation to guarantee deposits held in its banks would be introduced, prompting concerns about the state of financial institutions.
It followed Kuwait's second largest lender, Gulf Bank, saying it had made losses on derivatives trading.It followed Kuwait's second largest lender, Gulf Bank, saying it had made losses on derivatives trading.
And Saudi Arabia said it was making cash available to low-income citizens.And Saudi Arabia said it was making cash available to low-income citizens.
The plan to put 10bn riyals ($2.7bn) into the Saudi Credit Bank for interest-free loans to help people tackle financial difficulties intensified fears that the global financial crisis was extending to the Gulf region. The plan to put 10bn riyals ($2.7bn; £1.7bn) into the Saudi Credit Bank for interest-free loans to help people tackle financial difficulties intensified fears that the global financial crisis was extending to the Gulf region.
Oil factorOil factor
Share prices on the Kuwait Stock Exchange - where traders held another demonstration to urge more government support for the financial sector - fell 3%.Share prices on the Kuwait Stock Exchange - where traders held another demonstration to urge more government support for the financial sector - fell 3%.
Gulf Bank shares were suspended after its announcement, though the central bank said it "backs the bank and fully guarantees its deposits".Gulf Bank shares were suspended after its announcement, though the central bank said it "backs the bank and fully guarantees its deposits".
Dubai's main index lost 5% while the Saudi market, the largest stock exchange in the region, had fallen almost 9% on Saturday - the first day of its trading week.Dubai's main index lost 5% while the Saudi market, the largest stock exchange in the region, had fallen almost 9% on Saturday - the first day of its trading week.
Investors in the region have also been concerned about falling oil prices.Investors in the region have also been concerned about falling oil prices.
Despite Opec's efforts to steady prices by cutting output by 1.5 million barrels a day, US light sweet crude fell $3.69 to $64.15 on Friday while London Brent crude dropped $3.87 to $62.07.Despite Opec's efforts to steady prices by cutting output by 1.5 million barrels a day, US light sweet crude fell $3.69 to $64.15 on Friday while London Brent crude dropped $3.87 to $62.07.
In other developments:
  • Japan said it would sharply increase the maximum level of public funding that could be put into struggling domestic banks from 2 trillion yen to 10 trillion yen ($106bn; £66.7bn). Economy minister Kaoru Yosano said the existing ceiling had been "quite insufficient".
  • China's central bank said its economy remained sound but faced risks from the slowdown of the global economy because of its reliance on overseas demand.
 In other developments:
  • Japan said it would sharply increase the maximum level of public funding that could be put into struggling domestic banks from 2 trillion yen to 10 trillion yen ($106bn; £66.7bn). Economy minister Kaoru Yosano said the existing ceiling had been "quite insufficient".
  • China's central bank said its economy remained sound but faced risks from the slowdown of the global economy because of its reliance on overseas demand.
Alternative investmentsAlternative investments
Global money markets have showed renewed signs of stress, despite the billions of dollars that central banks and governments have pumped into the markets in recent weeks.Global money markets have showed renewed signs of stress, despite the billions of dollars that central banks and governments have pumped into the markets in recent weeks.
Investors worldwide are worried about falling share prices and the possibility of companies defaulting on their debts.Investors worldwide are worried about falling share prices and the possibility of companies defaulting on their debts.
As a result, they have been selling shares in markets across the globe and switching to less risky forms of investments, such as government securities.As a result, they have been selling shares in markets across the globe and switching to less risky forms of investments, such as government securities.
On Friday, the Dow Jones Industrial Average closed 3.6% down having gone more than 5% lower in early trading while the Nasdaq index finished 3.2% down.On Friday, the Dow Jones Industrial Average closed 3.6% down having gone more than 5% lower in early trading while the Nasdaq index finished 3.2% down.
On European markets, London closed 5% lower, Frankfurt slid more than 5% and Paris was down more than 3.5%.On European markets, London closed 5% lower, Frankfurt slid more than 5% and Paris was down more than 3.5%.
Asian shares tumbled, with Tokyo down 9.6%, Seoul plunging 10.6% and Hong Kong falling 8.3%. In Latin America, Brazil's main market fell 7% .Asian shares tumbled, with Tokyo down 9.6%, Seoul plunging 10.6% and Hong Kong falling 8.3%. In Latin America, Brazil's main market fell 7% .