* Oil prices fall 2.6 pct from Wednesday settlement
* Dubai debt delay revives financial crisis fears
* Dollar jumps as investors trim risk exposure
(Updates prices, market activity, adds quote)
By Rebekah Kebede
NEW YORK, Nov 27 (Reuters) - Oil prices dropped over 2
percent to nearly $76 a barrel on Friday as fears of possible
defaults in Dubai convulsed financial markets and boosted
safe-haven demand for the U.S. dollar.
U.S. crude for January delivery <CLc1> fell $2.01 to $75.95
a barrel by 1:23 p.m. (1823 GMT), 2.6 percent below Wednesday's
settlement.
U.S. markets were closed on Thursday for the Thanksgiving
holiday.
London Brent crude <LCOc1> rose 15 cents to $77.14 from
Thursday's settlement price.
Crude oil markets have looked to wider macro-economic data
and equities markets for signs of an economic recovery that
could lift oil demand.
Dubai has asked for a debt standstill on tens of billions
of dollars as part of a restructuring, sparking debt default
fears that could hit other parts of the global economy and
derail a fledgling recovery from 2008's financial crisis.
[]
"This is a similar reaction to last year's Lehman Brothers
debacle, it shakes confidence in financial markets and raises
the specter of contagion which could trigger a second wave in
the credit crisis," Mike Fitzpatrick, vice president at MF
Global in New York, said in a Friday research note.
Major U.S. indexes dropped after markets opened on Friday,
the NASDAQ <> falling nearly 2 percent and the S&P 500
down 19.14 points, or 1.72 percent to 1.091.49. Investors began
seeking refuge in government bonds. <MKTS GLOB>
For a graphic on risk assets hit by Dubai debt fears, click
on:
http://graphics.thomsonreuters.com/119/GLB_RSKA1109.gif
The U.S. dollar also pressured oil prices as concerns about
the possibility of a debt default in Dubai boosted safe-haven
demand for the greenback. []
A stronger dollar weighs on demand for commodities such as
oil that are denominated in the U.S. currency.
In earlier trading, crude sank as low as $72.39 a barrel,
but recovered slightly after Wall Street tempered its losses.
"The dollar pared its gain and the stock market its losses
so crude did also," said Mark Waggoner, president at Excel
Futures Inc in Huntington Beach, California.
Oil prices have fallen nearly 10 percent since striking a
year high of $82 early last month, as lacklustre economic data
and bulging fuel inventories in the United States combine to
dent hopes of a swift recovery in energy demand.
Traders said thin volumes on Thursday and Friday due to the
Thanksgiving holiday could also be exaggerating Friday's oil
price move.
The New York Mercantile Exchange will have a shortened
floor trading session on Friday.
(Additional reporting by Robert Gibbons in New York, Chris
Baldwin in London, and Fayen Wong in Perth; editing by
Marguerita Choy)
((rebekah.kebede@thomsonreuters.com; Reuters Messaging:
rebekah.kebede.reuters.com@reuters.net))
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