* MSCI world equity index up 0.5 pct as UAE supports banks
* Emerging markets up 1.4 pct, but Europe stocks drop again
* Abu Dhabi shares<> off 8 pct; Dubai<> down 7 pct
* Dlr down 0.4 pct; low-yielding yen up; Euro govt bonds up
By Mike Dolan
LONDON, Nov 30 (Reuters) - World equities generally steadied
on Monday as the United Arab Emirates shored up its banks after
last week's Dubai debt shock, but European shares fell again as
investors grew wary of what many now see as a volatile year-end.
Dubai's proposed delay last week in repaying billions of
dollars of debts sent shockwaves across world markets, wary of
bank exposure to the likes of Dubai World and property group
Nakheel and concerned about a resulting rise in risk aversion.
Much of the Gulf closed for a religious holiday late last
week and Abu Dhabi shares fell more than 8 percent when they
reopened Monday. Dubai's equity benchmark was down 7 percent.
With Abu Dhabi's support for the smaller emirate Dubai key
to resolving the crisis, the UAE central bank's decision on
Sunday to provide emergency liquidity to its banks helped ease
some concerns. But analysts said it was still unclear how the
central debt repayment issue would be resolved.
"The (UAE) central bank statement gives some assurance to
the market and that's what has triggered the positive reaction
in Asian stock markets," said Niels Christensen, strategist at
Nordea in Copenhagen.
The MSCI index of Asia Pacific stocks traded outside Japan
<.MIAPJ0000PUS> rose 2.7 percent, outperforming the 0.7 percent
gain in wider world index <.MIWD00000PUS>. Emerging markets
<.MSCIEF> were up 1.4 percent.
The dollar's main index, a gauge of the greenback's
performance against six other major currencies, was down half a
percent on the day at 74.61 <.DXY>, back within sight of a
15-month low of 74.170 struck last week.
Britain's HSBC <HSBA.L>, Europe's biggest bank and the one
with the biggest exposure to the UAE -- according to end-2008
estimates by the Emirates Banks Association, was up 1 percent.
But European stock indices at large fell again on the final
day of November, with the FTSE Eurofirst 300 <> down .6
percent and Britain's FTSE 100 <> down 0.4 percent.
Safe-haven European government bond prices <DE10YT=RR> were
higher.
Many analysts said the Dubai shock was merely a trigger for
wider reassessment of 2009's global markets rally as investors
took stock of positions into final weeks of the year.
"Even if there is some relief at the beginning of this week
due to some containment of the problems in Dubai, nerves are
likely to remain frayed going into the end of the year, with the
multi-month trend of improving risk appetite faltering even
before the Dubai news," economists at Calyon told clients.
"There have been plenty of reasons for markets to worry
lately including concerns about the shape of recovery in the
months to come as well as renewed banking sector problems and
these issues will not be allayed quickly."
As an example of those concerns in Europe, where the
European Central Bank meets this week amid expectations it will
announce some plans to exit its current super-loose monetary
policy, implied stock market volatility has soared.
Volatility measures of Germany's Dax <.V1XI> <> have
risen to almost 30 percent from as low as 23 percent Wednesday.
Reflecting the uncertainty about how trading would pan out
later today, Wall St futures <SPZ9> were little changed.
The euro rose 0.5 percent to $1.5040 <EUR=>, around a cent
away from last week's 15-month peak just above $1.5140.
ASIA RELIEVED
Earlier in Asia, Hong Kong shares <.HKI>, which posted their
biggest single day loss in eight months on Friday, and stocks in
Japan, which ended last week at a four-month low, were among the
strongest performers in the region on Monday.
In South Korea, the government pledged it will stay vigilant
while a top Indonesian central banker said there would be no
fallout from Dubai's debt problems on Southeast Asia's biggest
economy.
"I think it's going to be okay. At the end of the day Dubai
and Abu Dhabi need each other. And there will be a lot of
pressure on Abu Dhabi to step in, from the neighbouring
countries," Templeton Asset Management fund manager Mark Mobius
told Reuters.
Crude oil prices <CLc1> were up 0.6 percent $76.5 per
barrel. Gold prices <XAU=> were lower at $1168.70 per ounce.
(Additional reporting by Umesh Desai and Jamie McGeever;
editing by Chris Pizzey)
(To read Reuters Global Investing Blog click on
http://blogs.reuters.com/globalinvesting; for the MacroScope
Blog click on http://blogs.reuters.com/macroscope; for Hedge
Hub click on http://blogs.reuters.com/hedgehub)
((mike.dolan@reuters.com; +44 20 7542 8488; Reuters Messaging:
mike.dolan.reuters.com@reuters.net))
