Events

• May 1 - Battle of Cresson - Saladin defeats the crusaders
• July 4 - Saladin defeats Guy of Lusignan, King of Jerusalem, at the Battle of Hattin.
• October 2 - Saladin captures Jerusalem.
• Town of Byblos in Lebanon is taken by Saladin.
• Alexis Branas attempts to seize Constantinople in defiance of his master Isaac II Angelus.
• Cathedral of St. Jacob consecrated in Szczecin, Pomerania
• Destruction of Sigtuna - archbishop is killed
• Pope Gregory VIII proposes Third Crusade
• Knut Eriksson builds a castle in the island of Stockholm
• Compass in Europe
• The Toltecs are deposed at Chichen Itza
• Zen Buddhism comes to Japan
• King of Ankor Vat, Jayavarman VII defeats Cham conquerors
• Ghorin Muhammed conquers Punjab
• Genoa takes Bonifacio (in Corsica) from Pisa

Births

• September 5 - King Louis VIII of France (d. 1226)
• Arthur I, Duke of Brittany (d. 1203)
• Isabella of Angouleme (d. 1246)

Deaths

• July 4 - Raynald of Chatillon is executed by Saladin after the Battle of Hattin.
• October 19 - Pope Urban III
• December 17 - Pope Gregory VIII
• Alexis Branas , Byzantine general
• Roger de Moulins, Grand Master of the Knights Hospitaller
• Count Raymond III of Tripoli

Heads of states

• England - Henry II Curt Mantle, King of England (reigned 1154 - 1189).
• France - Philippe II, Auguste King of France (reigned from 1180 to 1223).