Wall Street set to open lower

Dubai World's hesitancy to pay off its debt sparks a selloff in Asia. European markets pare earlier losses.

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NEW YORK (CNNMoney.com) -- U.S. stocks were set to open lower Friday, following sharp declines in Asian markets, as Dubai World and its debt woes threatened Wall Street's confidence.

Dow Jones industrial average, Nasdaq and S&P 500 futures plummeted, with Dow futures down 222 points, hinting that stocks could take a dive during their abbreviated session on Black Friday.

Futures measure current index values against their perceived future performance, though they're not always an accurate forecast of stock activity after the bell.

The problems stem from Dubai World, the finance arm of Dubai, which is considering a postponement of payments on nearly $60 billion in debt. The debt was used to fuel a construction boom over the last few years, including its palm-tree shaped island projects, but the Middle East nation was hit hard by a real estate crunch.

"We had a market that was pretty strong, that in one sense was looking increasingly able to shrug off bad news," said Philip Isherwood, equities strategist at Evolution Securities in London. "Suddenly, we've had a shock to the confidence."

Isherwood said the global impact from Dubai World's financial difficulties "is not so huge" and "not worth 300 points of the Dow." But it serves as a nasty "wake-up call" to investor confidence.

"There isn't an absence of risk," he said. "There is always risk. We've just been reminded of that."

Wall Street ended Wednesday on a positive note, with the Dow Jones rising 31 points to hit a fresh 13-month high.

Stocks were boosted by tumbling jobless claims, which the Labor Department said hit a 14-month low last week, and a rise in new home sales.

The number of shares changing hands is expected to be low with many market participants absent following Thursday's holiday. As a result, trading is expected to be choppy Friday.

Retail: Retailers -- including Toys R Us, which opened its doors at midnight on Thanksgiving -- were welcoming shoppers taking advantage of "doorbuster" deals to mark Black Friday, the traditional kickoff to the holiday shopping season. Wal-Mart Stores (WMT, Fortune 500), the world's biggest retailer, stayed open Thanksgiving Day, but offered its specials beginning at 5 a.m.

While economists are calling an end to the recession, a record high jobless rate at 10.2% and a tight lending environment were likely to cause consumers to curb spending.

Companies: AIG (AIG, Fortune 500) announced late Wednesday it agreed to settle a long-standing legal battle with the insurance giant's former chairman, Maurice "Hank" Greenberg.

The parties agreed to release each other from all claims, including those filed by Greenberg against AIG for payments of future legal fees and other settlement costs.

They also agreed to submit past claims for AIG's payment of legal fees to a third party to determine how much AIG is legally obligated to pay up to $150 million.

World Markets: In Europe, London's FTSE 100, Germany's DAX pared earlier losses, while France's CAC 40 posted modest gains. In Asia, the decline was much more dramatic. Hong Kong's Hang Seng fell nearly 5% and Tokyo's Nikkei dropped almost 4%.

Money, oil and gold: The dollar gained Friday versus all major international currencies except the yen, after sliding to a 15-month low Wednesday.

Gold slipped in electronic trading, by $26.70 to $1,160.30 an ounce, after having hit a record high of $1,187.00 Wednesday.

The price of oil took a dive. Oil dropped $3.90 a barrel to $74.06 in electronic trading. To top of page

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