Global stock markets have dropped for the second day running following Dubai's request on Wednesday for a debt moratorium of at least six months. Financial analysts fear that Dubai's problems could reignite the financial turbulence of the credit crisis.

Tokyo's benchmark Nikkei dropped by 3.2 percent. Hong Kong's Seng Index slumped almost five percent by the close. In Europe, London's FTSE 100 index dropped again shortly after the start of trading, one day after falling by its sharpest amount since March. Wall Street reopens on Friday for a shorter session after shutting Thursday for Thanksgiving. Oil prices also fell, with US crude dropping by 4.5 percent to 74 dollars and 51 cents a barrel.

The Gulf state, one of the seven United Arab Emirates, has less oil money than its neighbours and had become a trading and tourism hub with global ambitions. The property boom took off on a huge scale, with the whole emirate doubling in size from 2002-2007. Dubai's projects included landmark palm tree-shaped island developments and skyscrapers higher than 800 metres.

On Wednesday, the government said it would ask creditors of its Dubai World conglomerate to agree to a standstill on its reported debt of 59 billion dollars. The Financial Times described the announcement as a "serious misjudgement or, more likely, a breathtaking cock-up".