Gulf stocks drop after US credit downgrade

Gulf stock markets dropped on Sunday a day after Saudi shares tumbled over 5 per cent as news of the historic US credit downgrading sent jitters through the region's markets.

Following the Muslim weekend, the Dubai Financial Market Index opened trading down 4.5 per cent before clawing back some ground to end the day 3.69 per cent weaker at 1,484.31 points.

Shares in property giant Emaar Properties shed 5.26 per cent.

In neighbouring Abu Dhabi, the General Index closed down 2.53 per cent at 2,603.22 points after opening in red, with banks losing 3.30 per cent and real estate shedding 5.61 per cent.

The Saudi stock market fell for the second consecutive day after being the first market globally hit by a selloff after international agency Standard & Poor's cut its credit rating for the United States.

The Tadawul All Shares Index traded 0.83 per cent down at 6,023.18 points after the largest Arab bourse shed 5.46 per cent of its value on Saturday.

The Kuwait Stock Exchange closed 1.61 percent at 5,927.8 points, while the Qatar Exchange was still trading down 2.3 per cent at 8,295.47 points. The Bahrain Bourse closed 0.33 per cent down at 1,276.86.

Oman's Muscat Securities market closed 2.08 per cent down at 6,150.19.

S&P said on Friday it was downgrading the United States' credit rating to AA+ from the top notch triple-A.

The announcement panicked international markets and was criticised by Washington as unjustified.

But S&P argued US leaders were becoming less able to get to grips with the country's huge fiscal deficit and debt load.

The agency also gave a negative outlook for the United States, saying there was a chance its rating could be cut again within two years if progress is not made to reduce the government budget gap.

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