Abu Dhabi led Middle East stock markets lower on Thursday as fears grew that fast-rising inflation will drive a sharp rise in interest rates that brings the global economy to a standstill.

The U.S. Labor Department's monthly consumer price index (CPI) report suggested inflation may have peaked in April but is likely to stay strong enough to keep the Federal Reserve's foot on the brakes to cool demand.

In Abu Dhabi, the index tumbled 5.8%, its biggest intraday fall since March 2020, dragged down by a 8.5% plunge in the United Arab Emirates' largest lender First Abu Dhabi Bank . The main share index in Dubai, the Middle East's business and tourism hub, dived 5.7%, with blue-chip developer Emaar Properties tumbling 8%.

Oil prices, a key catalyst for the Gulf's financial markets, fell in a volatile week as recession fears dogged global financial markets, outweighing supply concerns and geopolitical tensions in Europe.

Saudi Arabia's benchmark index slid 4.1%, with Al Rajhi Bank declining 6.5%. Among other stocks that fell, oil behemoth Saudi Aramco retreated 1.8% to 44.70 riyals. Aramco had dethroned Apple Inc as the biggest company by market capitalization after the latter fell more than 5% in the previous session. Aramco is now worth about $2.38 trillion easing from $2.43 trillion, still higher compared to $2.37 trillion valuation of Apple, Refinitiv data shows.

Outside the Gulf, Egypt's blue-chip index fell 1.6%, as almost all the stocks on the index were in negative territory. The Egyptian market remains exposed to the changing sentiment and could continue seeing a volatile performance, said Fadi Reyad, market analyst at CAPEX.com. "The change in expectations comes on top of the impact the country is witnessing from the conflict in Ukraine."

Tensions were stoked again as Finland confirmed it would apply to join NATO "without delay" in the wake of Russia's invasion of Ukraine, a war that has already had a major economic effect by driving up global energy and food prices.