?NEW YORK–Unit­ed States stock fu­tures plunged Fri­day as a wave of fear swept through world mar­kets over con­cerns that fi­nan­cial trou­ble in the Mid­dle East­ern city-state of Dubai will up­end a glob­al eco­nom­ic re­cov­ery. Stock fu­tures fell more than two per cent but pulled off their worst lev­els as stocks in Eu­rope strength­ened, while Trea­sury prices jumped sharply. The dol­lar gained against most oth­er ma­jor cur­ren­cies as in­vestors sought safe­ty fol­low­ing steep drops in over­seas mar­kets. Com­modi­ties prices tum­bled. US mar­kets were closed Thurs­day for Thanks­giv­ing. Ma­jor stock in­dex­es fin­ished at 13-month highs on Wednes­day. In­vestors are wor­ried that a de­fault by a gov­ern­ment in­vest­ment com­pa­ny in Dubai over US$60 bil­lion in debt pay­ments could have a rip­ple ef­fect in world fi­nan­cial mar­kets.

The fear is that loss­es in the small emi­rate, which has drawn wealthy tourists from around the globe in the past decade with its Las Ve­gas-in-the-Mid­dle East ap­peal, could im­per­il a nascent eco­nom­ic re­bound. Wor­ries about bad debt are fresh in in­vestors' minds af­ter the col­lapse of the US bro­ker­age Lehman Broth­ers in Sep­tem­ber last year pushed the world overnight deep­er in­to re­ces­sion as banks halt­ed lend­ing on fears of a domi­no ef­fect of bad loans. "I think this is a sign of things to come," said Dave Rov­el­li, man­ag­ing di­rec­tor of trad­ing at bro­ker­age Canac­cord Adams in New York. "Com­mer­cial re­al es­tate con­tin­ues to go low­er. Peo­ple are go­ing to con­tin­ue to de­fault on debt pay­ments."

New trou­bles?

In­vestors are be­ing forced to ask whether the trou­bles in Dubai will ush­er in a new pe­ri­od of fi­nan­cial in­sta­bil­i­ty and put in dan­ger an eight-month ral­ly in the stock mar­ket. How­ev­er, the abil­i­ty of world mar­kets to di­gest the trou­bles in Dubai with­out wide­spread pan­ic could al­so boost in­vestor con­fi­dence in the re­cov­ery in the fi­nan­cial mar­kets in the past year. The lat­est trou­ble on Wall Street come as the US kicks off the un­of­fi­cial start to the hol­i­day shop­ping sea­son. In­vestors will be track­ing news from re­tail­ers for in­sights in­to how much con­sumers will spend in the com­ing month. Con­sumer spend­ing is the biggest dri­ver of the US econ­o­my.

Dow Jones in­dus­tri­al av­er­age fu­tures fell 210, or 2 per cent, to 10,232. Stan­dard & Poor's 500 in­dex fu­tures fell 29.50, or 2.7 per cent, at 1,079.40. Nas­daq 100 in­dex fu­tures slid 44.50, or 2.5 per cent, to 1,749.75. Trad­ing vol­ume had been ex­pect­ed to be light ahead of a short­ened trad­ing ses­sion. Light vol­ume can trig­ger big swings in mar­kets. Stock mar­kets close three hours ear­ly, at 1 pm EST. Bond mar­kets close at 2 pm. In­vestors rushed in­to the safe­ty of US gov­ern­ment debt. The yield on the bench­mark 10-year Trea­sury note, which moves op­po­site its price, fell to 3.22 per cent from 3.28 per cent late Wednes­day. The yield on the three-month T-bill rose to 0.04 per cent from 0.03 per cent.

Green­back pres­sures

The ICE Fu­tures US dol­lar in­dex, which mea­sures the green­back against a bas­ket of for­eign cur­ren­cies, jumped 0.7 per cent. The dol­lar gained against the yen, which is al­so a safe-haven cur­ren­cy. Ear­li­er, the yen rose to a 14-year high against the dol­lar.