The Dubai developer building the world's tallest skyscraper said Wednesday it is calling off a planned merger with property companies controlled by the city-state's ruler, raising fresh questions about Dubai's debt problems and its willingness to repay.

Emaar Properties' surprise decision not to combine with three firms owned by Dubai Holding came after the emirate's main stock exchange plunged for a third straight day, as investors dumped holdings in the troubled Arab boomtown amid a scramble for details about the depth of its credit woes.

"There are a lot of different policies going on at once, and it's not exactly clear what the next steps are going to be," said Rachel Ziemba, a senior analyst at Roubini Global Economics who monitors Gulf state investments.

"Maybe someone has an idea of what's going to happen next, but there hasn't been a lot clarity."

That lack of information has scared off investors and prompted ratings agencies to sharply downgrade the creditworthiness of many companies once seen as having strong state support.

The Dubai Financial Market's benchmark index dropped 6.3 percent at Wednesday's close, building on steep declines since Monday. The exchange has seen its yearlong gains erased following the announcement that Dubai World, the emirate's biggest conglomerate, needed to restructure $26 billion in debt.

Dubai officials have said they will not guarantee debts racked up by the state-run company, which served for years as one of the city-state's chief engines for growth.

The drop was echoed in Abu Dhabi, the oil-rich emirate that is home to the United Arab Emirates' federal government. That bourse tumbled 2.8 percent.

As in previous sessions, shares of bellwether Emaar were among the hardest hit on the DFM, plummeting nearly 10 percent.

"There's a huge level of uncertainty, and investors are not interested in gaining more exposure to Dubai," Julian Bruce, director of institutional equity sales at EFG Hermes, said of the market's slide. "That's why everything is for sale."

Analysts at Barclays Capital said in a research report that Dubai Holding could be "next in line" with credit problems.

Confusion over Dubai's next steps has prompted rating agencies to rethink their once far rosier assumptions of Dubai government-linked debt. A cascade of credit downgrades has followed.

Moody's Investor Service said Wednesday it was putting all state-backed borrowers owned by the UAE federal government and the sheikdom of Abu Dhabi on review for possible downgrade.

A day earlier, Moody's cut the ratings of six government-linked companies, leaving all in junk status. Emaar was among the companies downgraded.