(RTTNews) - With traders expressing concerns about a financial crisis in Dubai, stocks saw significant weakness during trading on Friday. The major averages all ended the day firmly in negative territory, although well off their worst levels of the day. For the holiday-shortened week, the Dow and the Nasdaq posted modest losses, while the S&P 500 was nearly unchanged. The Dow fell 0.1 percent for the week, while the Nasdaq lost 0.4 percent.

Stocks moved sharply lower at the open as traders reacted to news that Dubai World, the main investment arm of Dubai, has requested to postpone payment on nearly $60 billion in debt. The news raised concerns about the potential impact of a default by the company.

The news contributed to substantial weakness in the Asia-Pacific markets that carried over into the U.S. markets. Light volume on Wall Street amid a holiday-shortened session may have helped to exaggerate the extent of the downward move.

Peter Boockvar, equity strategist for Miller Tabak, said, "The Dubai request for a standstill agreement as a precursor for a hoped for debt restructuring is not a complete surprise considering the weekly newspaper articles on their $80b+ debt overhang."

"What is the surprise is the lack of any immediate support from Abu Dhabi (maybe not willing to support another bailout), the uncertainty of what exposure foreign banks have if any and where may other debt laden bodies lie, corporate and/or sovereign," he added.

Among individual stocks, financial services giant ING (ING) showed a notable decline after the company priced its 7.5 billion euro rights issue at a nearly 40 percent discount. ING said it would issue 1.77 billion shares at 4.24 euros each.

Selling pressure waned not long after the open, however, and the major averages staged a notable recovery attempt over the course of the morning.

While the major averages moved well off their lows for the session, they still ended the day sharply lower. The Dow closed down 154.48 points or 1.5 percent at 10,309.92, the Nasdaq fell 37.61 points or 1.7 percent to 2,138.44 and the S&P 500 closed down 19.14 points or 1.7 percent at 1,091.49.

In overseas trading, stocks markets across the Asia-Pacific region ended sharply lower on Friday on concerns about the financial crisis in Dubai. Japan's benchmark Nikkei 225 Index fell 3.2 percent, while Hong Kong's Hang Seng Index plunged 4.8 percent.

Meanwhile, the major European markets showed a substantial turnaround after moving sharply lower at the open. The U.K.'s FTSE 100 Index rose 1 percent, while the French CAC 40 Index and the German DAX Index closed up 1.2 percent and 1.3 percent, respectively.

In the bond markets, treasuries saw considerable strength, as traders moved their money into the safety of government-backed bonds.

Resource stocks turned in some of the market's worst performances, as the news out of Dubai contributed to a steep drop in commodities prices.

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