Debt problems in Dubai have thrown European markets a scare, with chunky losses seen on all the major bourses. Stocks with any connection to Dubai were punished especially hard.
Dubai stunned financial markets late yesterday when it announced that Dubai World and its subsidiary Nakheel were seeking a debt standstill ahead of a restructuring.
Concerns over debt defaults naturally madewary of holding banking shares and as a result banks featured prominently among the worst performers. Credit Agricole, BNP Paribas and Societe Generale fell heavily in Paris, while Deutsche and Commerzbank hit the skids in Frankfurt. In Switzerland, Credit Suisse took a hit while UK banks , Lloyds Banking and Royal Bank of Scotland were also under the cosh.
Airbus firm EADS (European Aeronautic, Defence and Space), which is part owned by Dubai, was friendless while Porsche and its merger partner Volkswagen got caught in the crossfire, on fears about the 17% stake in the merged company that will be held by the sovereign wealth fund of Qatar.
Cement maker Lafarge plunged on fears that Dubaiâ€™s troubles will signal a further slow-down in infrastructure development in the Middle East.
Away from the Dubai fall-out Saint Gobain took a tumble after Goldman Sachs cut the construction materials firm from â€˜neutralâ€™ to â€˜sellâ€™.
Across the markets, the Dax slumped 188 points in Frankfurt to 5,614, while the Cac lost 129 point to close at 3,742. The Swiss market index shed 138 points to 6,342.