Europe shares suffer biggest 1-day drop in 7 mths…

World financial markets are reeling after Dubai announced its flagship company, Dubai World, is close to defaulting on what is effectively sovereign debt.

The government of Dubai announced it would ask to postpone payments on Dubai World’s debt, estimated at $US60 billion, for six months.

Dubai World is a global operator of ports and the parent company of Nakheel, Dubai’s largest property company.

Credit agencies immediately cut ratings of Dubai debt, sending European shares to their biggest one-day drop since April.

Banks were the biggest decliners, with HSBC, Lloyds, Royal Bank of Scotland and Barclays all down more than 4% in London, Deutsche Bank down 5.9% in Frankfurt and Société Générale slipping 3.6% in Paris.

Read the full article by Nevil Gibson, “Debt-laden Dubai sends world sharemarkets reeling” at The National Business Review” (Nov 27, 2009).

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