Investors “headed for the exit door” after the Dubai government’s investment vehicle Dubai World sought to suspend debt payments for six months, IG Markets analyst Ben Potter said.

Asian, European and US stock markets fell sharply as investors were spooked by the news, analysts said. The price of oil slumped to a seven-week low point close to 72 dollars and the dollar struck a 14-year low against the yen.

“The news of Dubai World raises some serious questions about where the global economy truly is at the present time and, most importantly, the effect this will have on market sentiment,” said Chris De Pury of specialist property law firm Berwin Leighton Paisner.

It has “reminded people that the underlying fundamentals have not changed, but it should not come as a surprise and it won’t be the last such large scale default,” he added, in a note.

“The question now is the extent of the drag on the wider global economy.”

Hong Kong slumped almost five percent by the close and Wall Street indexes fell more than two percent at the open.

Tokyo dived 3.22 percent, hit also by the yen striking a fresh 14-year high point against the dollar, which is bad for Japanese exporters.

Europe’s major stock pulled up in late London trading after earlier extending the losses of Thursday, when they had plunged by more than three percent in shock at the Dubai request.

In late afternoon European trading, London’s benchmark FTSE 100 index of leading shares was up 1.18 percent at 5,255.45 points, one day after falling by its sharpest amount since March.

Frankfurt’s DAX 30 added 1.24 percent to 5,682.77 points, and in Paris the CAC 40 rose 1.46 percent to 3,733.01, pulling back from a drop of almost two percent shortly after the open.

Analysts said the news from Dubai was a major blow to the emirate’s image but would have little lasting impact on other Gulf states, and others played down the impact on major banks with loans in the region.

But jittery investors Friday dumped stock in the two foreign banks with the heaviest exposure to Dubai — HSBC and Standard Chartered — as ripples from a feared debt default spread worldwide.

In Hong Kong trading HSBC dropped 7.6 percent to 87.00 Hong Kong dollars (11 US dollars) and Standard Chartered fell 8.6 percent to 185.90 Hong Kong dollars.

The Financial Times described Dubai’s shock announcement as a “serious misjudgment or, more likely, a breathtaking cock-up.”

The financial daily said the Dubai government’s decision “leaves a trail of unanswered questions that has done real damage to its reputation.” Related article: Foreign banks in the firing line

“Of all the glitzy emirates on the western shore of the Gulf, Dubai is easily the brashest. With the grenade it has just lobbed into the capital markets by calling for a six-month creditor standstill for Dubai World, it is effortlessly living down to that reputation,” the FT said.

Analysts at Exane BNP Paribas said that “so far the situation in Dubai seems contained, but a rise in government bond yields due to a higher risk premium because of soaring budget deficits is one of the main risks” for 2010.

Capital Raising by cortona resources

Cortona Resources (CRC) announced a $10.3 million capital raising last week aimed at accelerating development of its Dargues Reef gold project in NSW, 60 kilometres east of Canberra.

Predictably, the shares fell from their week’s high of 20¢ to as low as 14¢ after the company confirmed a planned share placement at 15¢ to an “international funds manager” at 15¢ to raise $2.5 million.

Fully underwritten renounceable 1-for-2 rights issue at 15¢

Proceeds of the new capital raising will be used to underpin a Definitive Feasibility Study (DFS) on the Dargues Reef main lode, part of the 100%-owned Majors Creek Gold Project within the company’s 700 square kilometres of exploration tenements The DFS is scheduled for completion by the end of 2010 with first production targeted for mid-2011.

Official website :

Cortona Resources Limited

http://www.google.com/finance?q=ASX:CRC

Cortona is a Perth based exploration company with a quality portfolio of projects in NSW and Western Australia, global gold resources of around (…)
www.cortonaresources.com.au/

While the initial project may appear on the small side, the upside for the company is the drill-testing to be carried out on other identified targets within a few kilometres of Dargues Reef. They lie mostly within “the shadow of the headframe”, according to Cortona’s managing director, geologist Peter van der Borgh. Initial drilling on five such targets has recovered promising gold intersections, such as 19 metres of 5.6g/t at the Tory Boy prospect, two kilometres from Dargues Reef.

Cortona resourcesrecently completed positive scoping study on a potential $30 million underground mine at Dargues Reef, based on and indicated and inferred resource of 1.44 million tonnes of 6.2 grams per tonne (g/t) for 286,000 ounces.

LINKS:

Cortona Resources News

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