European markets took a hammering on Thursday, hitting a three-week low after a three percent drop in shares on fears over Dubai’s debt. It was the biggest percentage drop in seven months.
Predictably banks led the way down on fears of their exposure to the Gulf state’s mammoth borrowings. Carmakers also slid, as several have significant shareholdings held by Gulf sovereign wealth funds. Firms with big gulf shareholders who fell included the LSE, EADS, and St. Gobain SA. The news also led to a spike in the price of gold, but that fell back after the dollar gained 0.7 percent against a basket of currencies, after hitting a 14-year low earlier against the Yen. Oil fell, dipping below 80 dollars a barrel.