DUBAI, United Arab Emirates - Abu Dhabi yesterday pumped $10 billion into its indebted neighbor, Dubai, sending stocks soaring and sparing Dubai and the rest of the Emirates federation the humiliation of an imminent default by one of the struggling Arab boomtown's star companies.

Dubai and Abu Dhabi are among the seven member states, or emirates, in the UAE.

Dubai officials seized on the news to try to repair damage done by weeks of uncertainty created by their unwillingness to fully stand behind Dubai World as the conglomerate looks to restructure its $60 billion in debts. The company is the Dubai government's investment arm, and it had aggressively bought into holdings worldwide.

Prior to the crisis, most investors had assumed the Dubai government itself would guarantee debts amassed by the company, which is the state's chief growth engine.

Dubai authorities are also scrambling to reshape the business hub's battered image, vowing that the city-state is committed to "transparency, good governance and market principles."

Officials outlined a new legal framework that promised to increase openness and protect creditors in future dealings with the conglomerate, offering lenders succor in a country where formal bankruptcy proceedings are largely untested.

"We are here today to reassure investors, financial and trade creditors, employees and our citizens that our government will act at all times in accordance with market principles and internationally accepted business practices," Sheik Ahmed bin Saeed Al Maktoum, chairman of the Dubai supreme fiscal committee, said in a statement.

Some $4.1 billion of the funds released yesterday by Abu Dhabi will go toward meeting a deadline to repay Islamic bonds issued by Dubai World's Nakheel property arm. The conglomerate, whose sprawling holdings range from the oceanliner Queen Elizabeth 2 to luxury retailer Barney's New York, will use the rest.

The move carries broader implications because UAE officials have looked to assure financial markets the country's economy was on solid ground. Their assurances led to concern that the whole country would be hit by the same investor mistrust that Dubai now faces.