HONG KONG: Asian stocks recovered after last week's steep sell-off over the Dubai debt crisis on growing speculation the fallout from a potential default will be limited, while assurances from various authorities also helped calm nerves. European stock index futures pointed to a higher open, futures for the Eurostoxx 50, German DAX and French CAC gaining 0.3-0.4 per cent. Banking shares, which bore the brunt of the selling on Friday on worries about banks' exposure to Dubai World and property group Nakheel, were at the forefront of Monday's rebound in Asia. "I think it's going to be okay. At the end of the day Dubai and Abu Dhabi need each other. And there will be a lot of pressure on Abu Dhabi to step in, from the neighbouring countries," Templeton Asset Management fund manager Mark Mobius told Reuters. Hong Kong shares, which posted their biggest single day loss in eight months on Friday, and stocks in Japan, which ended last week at a four-month low, were among the strongest performers in the region on Monday. In South Korea, the government pledged it will stay vigilant while a top Indonesian central banker said there would be no fallout from Dubai's debt problems on Southeast Asia's biggest economy.
South Korean markets have been especially sensitive to international financial instability mainly because the highly leveraged local banking system is heavily exposed to the global credit market situation. The MSCI index of Asia Pacific stocks traded outside Japan rose 2.8 per cent while the Thomson Reuters index of regional shares was 2.6 per cent higher. Reflecting some of the calm, U.S. stock futures are up 0.4 per cent pointing to a firm start at Wall Street, which had already started showing some signs of a recovery on Friday having erased some of the losses towards close. However, stocks in the United Arab Emirates, trading for the first time since the call for a delay in repaying billions of dollars in debt, dived with Dubai's index down 6.9 per cent and Abu Dhabi's share benchmark 8.1 per cent lower. - Reuters