by Daniel Costello

On Tuesday, investors again rushed to unload shares of Middle East companies expected to bear the brunt of a possible downturn in the region's economy amid Dubai's growing debt crisis. The sell-off came even as the government-owned investment giant, Dubai World, said it is making strides in renegotiating its troubled real-estate debt.

In Dubai, the main stock index ended down 5.6% to 1,831 points. Elsewhere in the region, Qatar's main stock index tumbled 8.4% to 6,592 points on Monday, the first trading day for the market since Nov. 25.

Global markets have been gyrating since Dubai World stunned investors last week by announcing plans to hold off paying its short-term debt. Emerging markets and Asia were hard hit last week, but bounced back in recent days as investors appeared to decide for now that Dubai's problems will remain contained.

The Dubai financial market will be closed starting Wednesday because of the National Day of the U.A.E. The market will resume Sunday.

 

In Japan, central bankers appeared to blink in their growing riff with politicians by announcing they would pump short-term funds into the banking system in an effort to jolt the moribund economy and counter resurgent deflation.

At a emergency meeting on Tuesday, the Bank of Japan's board voted to provide $115 billion in short-term loans to commercial banks to bolster liquidity. It's unclear just how effective the relatively small program will be, making the move potentially more symbolic.

Japan's Prime Minister, Yukio Hatoyama, has challenged the Bank of Japan in recent months to ease monetary policy as the country faces renewed deflation fears and its rising currency threatens to wipe out a six-month-old recovery. The yen climbed to a 14-year high against the dollar last week, dealing a blow to Japan's exports as a strong yen makes Japanese goods more expensive abroad.

The move bucks a global trend toward tighter monetary policies in recent months as governments continue to scale back emergency monetary easing and support of super-low interest rates as the global economy rebounds.

Australia on Tuesday raised interest rates by a quarter of a percentage point for a third straight month. The U.S. Federal Reserve said this week it soon may scale back its trillion-dollar portfolio of mortgage-backed securities and start unwinding its massive effort to prop up financial markets over the past year.

And after weeks of corporate brinkmanship, General Electric and French telecommunications company Vivendi have finally agreed to a deal allowing GE to buy Vivendi's 20% stake in NBC Universal. GE needs to buy the minority stake in order to complete its planned sale of its NBC Universal media assets to cable giant Comcast. The Comcast sale is seen as a bellweather deal for valuing A-list broadcasting companies as they suffer continued declines in viewership and advertising.