Gulf Arab states took emergency measures to boost confidence in the financial system on Sunday, including a rare cut by Saudi Arabia of its benchmark repo rate and a vow by the United Arab Emirates to protect national banks and guarantee deposits.

The moves came as Gulf stock markets extended weeks of declines as investors fretted about the global financial crisis. Officials escalated efforts to shore up markets after verbal support last week did little to lift negative investor sentiment.
Saudi Arabia, which is expected to deploy other measures such as allowing share buybacks, cut its benchmark repurchase rate for the first time in nearly two years on Sunday, signalling its desire to reduce lending rates.
It cut the repo rate to 5 percent from 5.5 percent for the first time since February, 2007. It also lowered reserve requirements to 10 percent from 13 percent, bankers said, citing a memo sent to their treasuries. "Sentiment will better but actual liquidity will not improve until the promised money comes," said an Emirates Bank treasury manager. "The Saudi move is good because they reduced the reserve requirements so that will put some money into the system.
The Saudi exchange, the Arab worlds stock market, closed at its lowest level in more than four years on Saturday amid concerns over the global financial crisis. The main index rose just 0.3 percent on Sunday.
In the United Arab Emirates, the government promised to protect banks from credit risks and to guarantee bank deposits, the official WAM news agency said on Sunday.
The government also agreed it would pump sufficient liquidity into the system if needed and facilitate interbank lending. Despite last week's co-ordinated rate cuts by global central banks, including those of Kuwait and the United Arab Emirates, world markets have not regained their footing as investors fret about the worsening financial turmoil.
In the Gulf, Dubai's index dropped 5.92 percent, Qatar was down more than 6 percent, Oman shed 5.67 percent and Kuwait dipped 1 percent. Shares in Dubai Ports World fell 18.18 percent on the index, hitting a lifetime low at $0.45. The container port operator had priced its IPO last November at $1.30. "This is really a very bad performance...it's definitely in line with the global strategy of liquidation - everyone just wants cash," says Mohamed Alami, head of the Naeem & Shares and Bonds international desk in the United Arab Emirates.
The latest market declines come on the heels of weeks of similar losses prompting officials to roll out a slew of measures.
Elsewhere in the UAE, Dubai Financial Market cut the limit on how far stocks can fall in one day to 10 percent from 15 percent. The decision was taken "in view of the exceptional global financial circumstances and the fluctuations currently witnessed in international markets," the bourse said in a statement.
It also said the move was temporary, without indicating how long it would last. In Kuwait the government decided last week on a package of measures, among them bigger investments by the Kuwait Investment Authority (KIA), the country's sovereign wealth fund, to prop up the country's bourse. According to a newspaper report on Sunday, KIA plans to increase its efforts to support the local market by investing an extra 1 billion dinars ($3.73 billion) in the bourse after having spent 280 million dinars in a first step.