Collection From BBC News
The main stock markets in Dubai and Abu Dhabi have closed sharply lower.Abu Dhabi saw a record one-day fall of 8.3%, while Dubai's Financial Market Index lost 7.3% - the biggest decline since October 2008.
Dubai's finance minister, Abdulrahman al-Saleh, said the government was not responsible for Dubai World's debt. "Creditors need to take part of the responsibility for their decision to lend to the companies," he told Dubai Television.
He added: "They think Dubai World is part of the government, which is not correct,"
Shares traded in the region for the first time since the state-owned property company Dubai World asked for an extension on repaying its debts.
Dubai's property developer, Nakheel, asked for trading of some of its Islamic bonds to be suspended. European markets were trading slightly lower. The UK's FTSE 100 was down 0.7%, Germany's Dax fell 0.7% and France's Cac 40 slid 1.3%.
Banks fell more sharply - in the UK, RBS was down 4.6% while Lloyds shed 5.7%. On the Dubai bourse, construction and financial stocks slumped nearly 10%. The debt-ridden Dubai World fell 15%.
"This was expected because markets have panicked over exaggerated reports in the Western media," Hamam al-Shamaa from Al-Fajr Securities said. He added that many foreign investors were withdrawing from the market and that tomorrow would probably be a similar day.
While shares in the Middle East dropped sharply, Asian shares rebounded on Monday on hopes the Dubai debt crisis will not spread to other financial markets after the UAE central bank decision.
Asian markets closed before the announcement that Nakheel had asked to suspend some of its bonds. Banks such as Mizuho Financial and Mitsubishi UFJ Financial Group in Tokyo, and HSBC and Standard Chartered in Hong Kong led the rally.
Tokyo's Nikkei 225 index rose 2.9%, while Hong Kong's Hang Seng gained 3.6% and stocks in Shanghai rose 2.5%. Shares in Samsung C&T, builder of the Burj tower in Dubai that will be the world's tallest when completed, gained nearly 5%.
The yen rose against the dollar after the announcement from Nakheel, paring earlier declines. The South Korean won also gained after the finance ministry said its banks had "limited" exposure to Dubai debt. Crude oil rose by 1% to more than $76 a barrel, after the benchmark commodity slid last week on fears over Dubai's financial health.
On Sunday, the central bank of the United Arab Emirates (UAE) said it was setting up a facility to provide banks with extra liquidity. The liquidity will be available to all UAE banks as well as foreign banks operating in the Emirates.
The bank added that the banking system in the UAE was more sound and liquid than a year ago. That came after Wednesday's announcement from Dubai World asking for a suspension on its debt repayments, which sent world stock markets tumbling.
Meanwhile, neighbouring Abu Dhabi has said it will "pick and choose" how to assist Dubai. "We will look at Dubai's commitments and approach them on a case-by-case basis," an Abu Dhabi government official said on Saturday. "It does not mean that Abu Dhabi will underwrite all of their debts," he added.
Paying the price
The BBC's economics editor Stephanie Flanders said the situation in Dubai had alerted investors to the idea that you can lose money on government bonds - even if they appear to have implicit guarantees.
The repercussions of Dubai's debt crisis is already making it more expensive for countries with large deficits to sell their debt. "There are lots of other governments out there who don't have rich neighbours with oil to bail them out, who may have trouble in the next few months or years," she commented. "Greece and Latvia are paying more for their debt, thanks to Dubai."