By Tamara Walid and Jeremy Gaunt

DUBAI/LONDON (Reuters) - Dubai struggled to ease fears of debt default on Thursday after its move to delay repayments at two flagship firms shook confidence in the Middle East as a centre for investment and a source of capital.

Dubai's debt problems, a hangover from a property boom that produced the world's tallest building, have shaken trust among Western investors who turned to the oil-exporting Gulf region for help during the global financial crisis.

The emirate shook the financial world on Wednesday when it said it would ask creditors of Dubai World, the conglomerate behind its rapid expansion, and Nakheel, builder of its palm-shaped islands, to agree to a standstill on billions of dollars of debt as a first step towards restructuring.

State-run Dubai World had $59 billion (35.9 billion pounds) of liabilities as of August, a large proportion of Dubai's total debt of $80 billion.

Dubai tried to revive confidence by saying on Thursday its profitable DP World DPW.DI, which runs 49 ports around the world, would not be involved in the restructuring. DP World, which has $3.25 billion outstanding bonds, is majority owned by Dubai World but has shares listed on NASDAQDubai.

"It might be a move to distinguish the solvent from less solvent companies in an attempt to shift the weight away from the less exposed entities," said John Sfakianakis, chief economist at Saudi Fransi bank.

But European bank shares, which had recovered in recent months on hopes that the worst of a global crisis was over, fell to lows not seen since May.

There was no immediate sign that U.S. banks were exposed, although checks were difficult to make given Thursday's Thanksgiving holiday.