The DMF Index was trading down six percent at 3,2240.00, while the other United Arab Emirates stock market, Abu Dhabi Securities Exchange saw its index drop 4.5 percent to 3,365.95 points.

Both markets were affected by a sharp drop in the key real estate sectors.

Dubai's market leader, real estate developer Emaar, shed 6.7 percent, while the sector as a whole dropped 7.3 percent. In Abu Dhabi, the real estate market was 9.5 percent lower.

The small Muscat Securities Market shed 5.5 percent.

The Kuwait Stock Exchange, the second-largest Arab bourse, dropped by about 1.1 percent to 11,586.00 points.

The Doha Securities Market opened more than five percent lower and was trading below the key 8,000-point mark, while Bahrain Stock Exchange managed a tiny increase of just 0.07 percent.

The Saudi market is closed for the weekend. The Gulf's largest exchange had recovered more than 55 billion dollars of capitalisation over the past three days to swell its value to 360 billion dollars.

Fears of a global recession sent Asian stocks plunging on Thursday, with Tokyo closing down 11.4 percent -- the index's second-largest percentage loss ever and the steepest fall since the "Black Monday" crash in October 1987.

Renewed panic erupted in Asian trading rooms after a dismal US retail sales report stoked fears that the credit crunch will push some of the world's biggest economies into deep downturns.

European stock markets followed Tokyo's nosedive at opening, with London, Frankfurt and Paris shedding more than five percent of their values.

Paris was down 5.77 percent, London slid 5.18 percent and Frankfurt had dropped 5.07 percent about 15 minutes after the start of trading.

Oil prices also fell in Asian trading with New York's main futures contract, light sweet crude for November delivery, dropping 2.39 dollars to 72.15 dollars a barrel.

Governments in the oil-rich region have taken steps to support their financial systems after stock markets sustained huge losses last week.

On Tuesday, the UAE made 19 billion dollars available to local banks, bringing to 32 billion dollars the total pledged since the beginning of the crisis.

On Sunday, it had guaranteed deposits and savings at banks operating in the country, as well as interbank lending.

Saudi Arabia, Kuwait and Bahrain have slashed interest rates, pledged tens of billions of dollars of liquidity to domestic banks and eased lending restrictions.

Qatar also decided to buy between 10 percent and 20 percent of banking shares.