Dubai ruler plays up strength

By Rachna Uppal and Jason Benham

DUBAI (Reuters) - Gulf markets dropped again on Tuesday, taking little comfort from Dubai World's plan to restructure about $26 billion (15.6 billion pounds) of debt and despite reassurances on economic resilience from the rulers of Abu Dhabi and Dubai.

Dubai stocks fell a further 5.6 percent and the Abu Dhabi bourse lost 3.6 percent on their second trading day since Dubai last week asked creditors of Dubai World and its property arm Nakheel for a six-month delay on debt repayments. Qatar's bourse was also more than 8 percent lower.

State-controlled Dubai World, which led the emirate's transformation into a regional hub for finance, investment and tourism, unveiled details late on Monday of the restructuring and which parts of its empire were affected. The process will focus on $26 billion of debt owed by its main property firms, Nakheel and Limitless.

Dubai World said it had appointed Moelis & Co, the investment bank created by former UBS president Ken Moelis, to advise on the restructuring while Rothschild would continue to be its investment adviser.

Global markets took a pounding when news broke last week that Dubai World was unable to pay its debts, although on Tuesday, Asian and European stocks were up, following the lead from Wall Street overnight as fears of contagion eased.

Dubai's ruler Sheikh Mohammed bin Rashid al-Maktoum, who is also the United Arab Emirates' vice president, prime minister and defence minister, said the global reaction had shown "a lack of understanding."

"We have the determination and will power to face all challenges, including the ill-intentioned media challenges," Sheikh Mohammed said, according to a statement from his office.

John Sfakianakis, chief economist at Banque Saudi Fransi-Credit Agricole Group in Riyadh, said the Dubai ruler's remarks "although very broad, should be welcomed by global markets at a time when they are thirsty for clarity, reassurance and information."