Not even a holiday in the US could slow down the pain felt on the JSE on Thursday as dramatic news of a potential debt default in Dubai whacked riskier markets. Some analysts said that Dubai's problems could weigh on the global recovery, to which South Africa is very closely hinged.

A weak Asia, in which the Nikkei lost 58 points to 9383 and where Hong Kong shares were among the region's worst-performing as selling pressure on Chinese banks continued for a third day on persistent fears they may need to raise funds to meet potential tougher regulatory requirements, did not help matters locally either. The FTSE, meanwhile, was down 116 points at 5248 by the local close.

At 5pm the JSE was off by a sickly 464 points, or 1.69 percent, with resources leading the pack with a loss of 1.87 percent. Golds were up by 0.87 percent as another record was breached and the rand weakened, but platinums fell 0.87 percent.

Industrials lost 1.46 percent, while banks headed south by 1.69 percent and financials by 1.74 percent.

The rand was bid at 7.47 to the dollar, from 7.42 when the JSE closed on Wednesday – a reflection of the Dubai play. Gold was quoted at $1182.60 a troy ounce from $1180.50 at the JSE's last close, and platinum was at $1453.50/oz, from $1471/oz at the bourse's previous close.

A local trader said that the US holiday is keeping volumes down, but there is concern in markets around the world of a debt bubble bursting in Dubai.

According to Dow Jones Newswires the threat of a debt default by Dubai left investor appetite for risk on the wane and the USD recovering some of its recent sharp losses.

Traders have reined in their dollar selling against the euro, sterling, and the Australian and New Zealand dollars overnight, partly because of a fresh bout of investor nerves surrounding the possibility of the debt default by Dubai.

European banks face potential losses on an estimated $40-billion in exposure to Dubai after the city state's largest corporate entity, Dubai World, asked creditors for a six-month standstill on debt repayments, raising fears that recent signs of improvements in banks' bad debt levels could reverse and Dubai's problems could weigh on the global recovery.

Most banks on Thursday said their exposure to Dubai and Dubai World is small or wouldn't comment. Dubai World accounts for about $60-billion of the city state's $80-billion in liabilities, of which half is estimated by Credit Suisse analysts to be held by European banks, reports Dow Jones.

The city state shocked investors on Wednesday by saying it would restructure Dubai World and wants creditors to hold off on demanding interest or repayments until at least the end of May. After several years of rapid and debt-fuelled growth, the Dubai economy has suffered in the past 18 months as the global recession took hold and foreign investment in its ambitious infrastructure projects dried up.

But the local equities dealer concludes in a more positive frame of mind: "If anything comes out that is positive, then we could see a good upturn on Monday." It is likely the US will only have limited trading on Friday.

Elsewhere, spot gold hit another record in Asian trading on Thursday, at US$1195.50 per troy ounce, extending its gains after strong buying late in the US session, news of more central bank buying of gold and a weaker dollar.

In data this morning South Africa's producer price index (PPI) registered deflation of –3.3 percent year-on-year (y/y) in October from –3.7 percent y/y in September, Statistics South Africa (Stats SA) data on Thursday showed.

The PPI decreased 0.1 percent on a monthly basis after September's monthly decrease of 3.2 percent.

The PPI was expected to have decreased at 3.1 percent y/y according to a survey of 10 leading economists by I-Net Bridge, with forecasts ranging from –2.8 percent to -3.7 percent y/y.

Media giant Naspers on Thursday reported headline earnings per share of 6.48 rand for the six months ended September 30, up 36 percent from 4.76 rand earlier.

Fully diluted core HEPS of 6.34 rand were reported from 4.70 rand earlier.

Earnings per ordinary share were at 4.24 rand, from 10.15 rand earlier, with diluted EPS of 4.15 rand, from 10.02 rand previously.

Revenue was up to R13.5-billion up six percent from R12.65-billion earlier. The group made an operating profit of R1.93-billion from R1.66-billion previously. The share closed down 4.15 rand, or 1.44 percent, at 283.85 rand.

Global resources giant BHP Billiton on Thursday said it planned to invest about us$10 billion in capital and exploration expenditure during the 2010 financial year. The share closed 5.83 rand, or 2.48 percent, lower at 228.90 rand.

Among the heavyweights, Anglo (AGL) had lost 10.01 rand, or 3.04 percent, to 318.99 rand, Sasol (SOL) was down 5 rand, or 1.66 percent, to 297 rand and Compagnie Richemont (CFR) shed 48 cents, or 1.92 percent, to 24.50 rand.

Kumba Iron Ore (KIO) lost 10.18 rand, or 3.84 percent, to 255 rand and Exxaro (EXX) was down by 2.81 rand, or 2.92 percent, to 93.49.

Wescoal (WSL), the AltX-listed coal logistics company, on Thursday said it expected its headline earnings per share to decrease by between 60 percent and 75 percent in the six months to end September 2009.

The company said its earnings per share are expected to decrease between 40 percent and 55 percent. The share was down seven cents to 74 cents by the close.

Among the miners, Gold Fields (GFI) was up 160 cents, or 1.45 percent, to 111.60 rand, while Harmony (HAR) added 249 cents, or 3.06 percent, to 83.99.

In news junior gold producer Simmer & Jack Mines (Simmers, SIM) on Thursday said it had launched a High Court application seeking to stop Xelexwa Investment Holdings and its joint provisional liquidators from convening a meeting to remove the directors of its company.

Xelexwa is the company through which Simmers black economic empowerment partner Vulisango Holdings held its Simmers shares. Simmers ended down seven cents at 1.83 rand.

Among industrials SABMiller (SAB) receded by two rand to 218 rand, Bidvest (BVT) lost 176 cents, or 1.48 percent, to 117 rand, Barloworld (BAW) was off by 195 cents, or 3.87 percent, to 48.50 rand and British American Tobacco (BTI) was 3.60 rand lighter – or 1.53 percent - at 231 rand.

Mobile carrier Vodacom (VOD) lost 180 cents, or 3.03 percent, to 57.70 rand. In other news Solidarity on Thursday urged Telkom (TKG) to halt the retrenchment of what it estimated to be 4,000 temporary and contract workers and called on the telecommunications group to follow the correct Section 189 process.

The trade union warned that if its request was ignored, the matter would be referred to the Commission for Conciliation, Mediation and Arbitration (CCMA) as well as the Labour Court. Telkom ended the day down six cents to 38.69 rand.

Meanwhile, Angloplat (AMS) was down by 8.10 rand, or 1.07 percent, to 746.50 rand.

The trade union Solidarity said on Thursday that it has reached a wage agreement at the world's third-largest platinum company, Lonmin (LON). In terms of the wage agreement, employees will receive a wage increase of 9.5 percent, backdated from October this year. Lonmin lost seven rand, or 3.15 percent, to 215 rand.

Among the banks, Absa (ASA) stood out as it reduced by 3.40 rand, or 2.66 percent, to 124.20 rand.

In news, short-term insurer Santam (SNT) said on Thursday overall underwriting conditions remain challenging, although it has achieved an improvement in margins during the second half to date. The company said in an operational update that the absence of very large industrial claims in the corporate business unit during this period contributed largely to this improvement. Its share bucked the trend to end up two rand, or 2.11 percent, at 97 rand.

On the retail front, Truworths (TRU) was in the red by 160 cents, or 3.76 percent, at 41 rand.

Astral Foods (ARL), meanwhile, also stood out with a 3.40 rand loss, or 3.24 percent, to 101.50 rand.

Construction stock Murray and Roberts (MUR) also had a tough day as it lost 2.40 rand, or 4.71 percent, to 48.60 rand.

The JSE Thursday approved the transfer of Pan African Resource's (PAN) listing from AltX to the gold mining sector of the main board of the JSE.

The move will take effect from the commencement of business on Tuesday, 1 December 2009. Accordingly, the JSE will become the company's dual primary regulator. It ended down just one cent at 90 cents.

I-Net Bridge

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