FTSE shrugs off Dubai fears

London’s leading shares have started the day positively as investors shake off concerns surrounding the fallout from Dubai.

The FTSE has opened the day in positive territory as it shakes off the turmoil surrounding Dubai World, the holding company that has asked for an extension on the maturity of its sukuk bond. As at 9.30 GMT, the leading share index was up 88 points, or 1.71%, to 5279.

Banking stocks and miners lead the rally, with Royal Bank of Scotland one of the morning's winners. However Lloyds, which is in the midst of launching the UK's biggest ever rights issue, is believed to be more exposed to the Dubai fallout and slipped lower this morning. ENRC and Rio Tinto are leading the charge of mining shares.

The recovery of the FTSE comes despite shares in Dubai again opening weaker as investors assess the damage caused by property giant Nakheel, which is owned by Dubai World. The Dubai and Abu Dhabi indices plunged around 6% in early trading. Speculation yesterday focussed around the possibility of Abu Dhabi bailing out its debt-burdened emirate.

Stocks in the US gained ground yesterday as banks assessed that the turmoil in Dubai would not shake world markets as much as feared. After plunging in afternoon trading, the Dow Jones closed on 10344, up 34 points. The rally came despite figures showing more people went shopping over Thanksgiving than last year but spent less money. Retailers, including Wal-Mart and Macy's, were down.

Meanwhile, stocks in Asia mirrored the sentiment elsewhere that Dubai's debt problems are containable, with the Nikkei rallying 264 points to 9,345.