DUBAI: Stock markets in the United Arab Emirates plunged for a second day on Tuesday after the government said it is not guaranteeing Dubai World's 59 billion dollars of debt and the troubled conglomerate unveiled major restructuring plans.

The Dubai market fell by 6.25 percent while the Abu Dhabi bourse tumbled 5.91 percent in early trade, bringing total losses since the exchanges re-opened Monday to around 13 and 14 percent respectively.

Investors were alarmed by a finance ministry official's statement on television that the government is not guaranteeing the 59 billion dollars of debt held by massive state-controlled conglomerate Dubai World.

The market was also digesting a statement in the middle of the night from Dubai World saying that it wants to change the repayment terms of 26 billion dollars in debt and restructure the companies that owe the money.

Dubai's leading real estate sector fell by 8.55 percent on Tuesday, near the one-day maximum-allowed drop of 10 percent, while the finance and investments sector shed 9.6 percent of its value.

Giant property developer and market leader Emaar sank by 9.87 percent, following the pattern of its Monday movement, while Dubai Islamic lost 9.84 percent of its value.

Abu Dhabi's real estate sector also plummeted 9.9 percent, while the banking sector fell 6.46 percent.

Dubai Department of Finance head Abdulrahman al-Saleh said on state television: "It is true that the government is the owner, but as the firm has several activities and is exposed to different sorts of risks, the decision was from the day of its establishment that the company would not be guaranteed by the government."

Dubai World meanwhile issued a statement in the middle of the night announcing a debt review and business restructuring.

"Following a detailed review of the Group's liquidity and capital structure, Dubai World has concluded that it should immediately consider alternatives in respect of the debt obligations of certain entities within the group," it said.

"The total value of debt carried by the companies subject to the restructuring process amounts to approximately 26 billion dollars, of which approximately 6 billion relates to the Nakheel sukuk" or Islamic bond, the Dubai World statement said.

The Dubai government's request last Wednesday for a six months halt to debt payments only had an immediate impact on a 3.5 billion dollars Islamic sukuk bond due for repayment this month by Dubai World construction unit Nakheel, builder of the iconic Palm Jumeirah artificial island.

But Dubai World's overnight press release said the debt review and business restructuring will affect large parts of its operations, including Nakheel World and Limitless World, though Infinity World, Isthithmar World and the group's extensive international ports business will remain intact.

Dubai World may sell parts of the various unit to raise money and it wants to talks to creditors about new repayment conditions.

"Initial discussions have commenced with the banks of Dubai World and are proceeding on a constructive basis."

Last Wednesday's debt freeze announcement sent shockwaves around the world on Thursday and Friday as investors feared a possible default by Dubai and its state-owned businesses, which together owe an estimated 80 billion dollars.

The four-day regional holiday for the Muslim holiday of Eid al-Adha meant Gulf stock markets had no chance until this week to react. Bourses in Kuwait and Qatar only reopened on Tuesday, when both were lower, with Qatar dropping nine percent and Kuwait easing by around 2.1 percent.