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Last Updated: Monday, 29 August 2005, 16:38 GMT 17:38 UK
Dubai cancels suspect share sales
The floor of the Dubai Stock Market
The prospect of record oil revenue has helped lift Dubai's stock market
Regulators in the United Arab Emirates have cancelled trading in Dubai Islamic Bank shares worth $2.6bn (1.4bn) after accusations of price manipulation.

A frenetic day on Sunday saw the bank's shares rise 7.4%, with the trades accounting for 84% of the day's total turnover on the Dubai stock exchange.

But the deals have now been annulled, and an unspecified number of investors have been suspended pending an inquiry.

Analysts welcomed the probe as evidence of a tougher regulatory approach.

Heavy trading

Dubai Financial Market, the United Arab Emirates' financial regulator, said it would name those suspected of manipulating the market after completing its inquiry next week.

The authorities appear to have acted quickly and that is a good thing
Shailesh Dash, Global Investment House

Dubai's stock market has surged this year as investors speculate that record oil prices will help drive economic and corporate profit growth.

Increased activity has led to calls for tighter regulation, historically seen as weak in Gulf markets.

'Bold step'

Financial analysts said they were cheered by the quick action of the market regulators.

Zahed Chowdhury, an analyst with HSBC in Dubai, described the cancellation of share trades as a "fairly bold and dramatic step".

"If these types of practices are allowed to go unchecked, they can certainly undermine confidence in the market," said Shailesh Dash, an analyst at Global Investment House in Kuwait.

"The authorities appear to have acted quickly and that is a good thing, especially at a time when a lot of international investors are taking an interest in the Dubai market and in markets across the Gulf."

The Dubai stock market has seen share trades worth $55.2bn in the first seven months of 2005, compared to $13.8bn for the whole of last year.

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