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The price of gold tumbled more than 4% after debt problems at Dubai's state investment company unnerved investors and boosted the U.S. dollar.
Oil, stocks and other commodity prices also fell for a second day after Dubai World said it was seeking to delay repayment on some $60 billion U.S. in debt. Shares in emerging markets were particularly hard hit as investors took fright at holding riskier assets.
Financial stocks also came under pressure on concern about bank lending to Dubai. The DJ Stoxx European Banking Index has dropped 8.5% in three sessions. Analysts say Canadian banks' exposure Dubai World are limited.
Stocks in Canada and the U.S. are also forecast to open lower. The S&P/TSX dropped 200 points to 11,436.80 yesterday, while the U.S. markets were closed for the Thanksgiving holiday and will only open for a half-day session today.
Sliding commodity prices, with oil dropping nearly 5% towards $74 a barrel, and a firmer U.S. dollar also hit the loonie. The Canadian dollar neared a three-week low against the greenback.
Gold, which has been trading at record highs and is up nearly 30% this year, recovered some ground by 8 a.m. this morning to trade 2% lower at about $1,164 US an ounce.