LONDON: The Dubai stock market yesterday showed some gains for the first time since the debt crisis unfolded 10 days ago, providing a respite for the region which has been in turmoil since the state-backed Dubai World asked for more time to repay its huge debts.

The 1.2 per cent rise

in Dubai share values came after a 12.5 per cent fall in the previous two days of trading, but was still lower than many had predicted and some experts warned of significant new falls ahead.

Dubai World, whose assets include P&O ports and the QE2, has asked lenders, among them Royal Bank of Scotland (RBS), for a debt standstill till 2010; a move which raised fears the global economy could be entering a dangerous new phase and triggered a wider global share sell-off.

Four British banks, which have a combined exposure of around $5

billion, have formed a creditors group with two local banks led by the

accounting firm KPMG, and are set to meet with Dubai World officials in the next couple of days.

In heavy share trading yesterday — the first transactions since public holiday in the region began in the middle of last week — the main Dubai index rose to 1,853 points.

Sentiment in the wider Middle East region also improved.

The stock market in neighbouring oil-rich Abu Dhabi surged ahead 4 per cent to 2,673 points, its biggest one-day gain since March, while markets in Kuwait and Saudi Arabia were also up.

“Today was an expected performance for both UAE markets. However, I expected a stronger performance from Dubai, more aggressive volumes,” said Chamel Fahmy, a regional senior sales trader at Beltone Financial.

“Institutions are more concerned with the effect of the Dubai debt on the real estate market, we could see Dubai prices going down by a further 30-35 per cent,” he added.

Oman’s top banks admitted yesterday they had a total exposure of $77 million to the troubled conglomerate Dubai World, sending their shares down nearly 6 per cent.