European shares fell to their lowest close in more than three weeks on Monday, with oil companies among the biggest losers, as worries about Dubai's debt continued to unsettle global equity markets. The FTSEurofirst 300 index of top European shares fell 1.4 percent to 985.30 points, the lowest close since November 4.
The index rose 0.9 percent in November and is up more than 52 percent from the lifetime low it hit on March 9. Dubai's government said on Monday it was not responsible for the debts of its flagship conglomerate, offering little clarity on a plan to delay billions in debt repayments that has rattled world markets.
Dubai's benchmark index closed 7.3 percent lower on Monday. "We don't see this as a turning point. We're not down that far from the recent peak," Teun Draaisma, equity strategist at Morgan Stanley, in London, told Reuters. In an across-the-board decline, energy shares were among the biggest fallers, even as crude oil futures staged a late recovery to trade above $76 a barrel after hitting a six-week low in the previous session.
BP, Royal Dutch Shell, BG Group, Total and StatoilHydro fell between 1.6 and 2.8 percent. Dubai last week raised fears of a second bout of global financial turmoil by asking for a six-month repayment freeze on debt issued by Dubai World and its unit Nakheel, a property developer at the heart of the emirate's boom.
Analysts are split on how deep the world-wide impact will be, though some banks have already been identified as having significant exposure in the region. Banks to fall on Monday included Standard Chartered, Barclays, Royal Bank of Scotland, Banco Santander and Credit Suisse, down between 1.5 and 4.5 percent. Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC-40 all ended the day 1.1 percent lower.
Merck KGaA fell 4.1 percent as US drug regulators held up an application from the drugmaker to bring its multiple sclerosis pill cladribine to the market. Rival drugmakers GlaxoSmithKline, Roche and Sanofi-Aventis fell between 1.4 and 1.7 percent. RWE fell 1.6 percent after its chief financial officer told a German newspaper the utility will use the proceeds from the sale of its remaining stake in American Water to cut debt instead of paying a special dividend.