EUROPE news: Europe’s main stock markets suffered further losses …the euro slid yesterday as Cyprus’ international bailout appeared close to unraveling

Europe’s main stock markets suffered further losses and the euro slid yesterday as Cyprus’ international bailout appeared close to unravelling.

 A man walks next to an electronic board at the reception hall of the Athens stock exchange in Greece yesterday. Europe’s main stock markets suffered further losses and the euro slid yesterday as Cyprus’ international bailout appeared close to unravelling.
A man walks next to an electronic board at the reception hall of the Athens stock exchange in Greece yesterday. Europe’s main stock markets suffered further losses and the euro slid yesterday as Cyprus’ international bailout appeared close to unravelling.

London’s FTSE 100 index of leading companies slid 0.26% to close at 6,441.32 points, while in Frankfurt the Dax 30 dropped 0.79% to 7,947.79 points and Paris’ Cac 40 shed 1.3% to 3,775.75 points.

Elsewhere, Madrid’s Ibex 35 shares index tumbled 2.2% and Milan’s FTSE Mib sank 1.59% in value.

In foreign exchange activity, the European single currency slid to $1.2873, from $1.2957 in New York late on Monday, to hit its lowest level since November 22.

Gold prices, meanwhile, rose to $1,610.75 an ounce on the London Bullion Market from $1,595.50 on Monday.

Controversial plans by Cyprus to impose a stiff levy on bank savings to unlock an international bailout had pushed global share prices lower and sent the euro tumbling the previous day.

The market turmoil and an angry backlash at home prompted Cypriot officials yesterday to amend the plan to shield small savers.

But the changes would likely leave the country short of the €5.8bn ($7.5bn) it must raise to unlock a €10bn bailout from the EU and IMF, and the ruling party said it would abstain from the vote in the parliament.

“This political turmoil and parliamentary impasse now raises the real risk that EU policymakers may be faced with a very real decision as to whether they need to consider pushing Cyprus out of the euro area, and as such run the risk of a contagion effect across the region,” said CMC Markets analyst Michael Hewson.

“It would seem a very high price to pay for the sake of an amount of €5bn,” he added.

Contagion concerns pushed the Spanish government’s long-term borrowing costs back above 5.0%. The yield on its 10-year bonds rose to 5.024% in secondary trading from 4.962% on Monday.

The yield on 10-year Italian government bonds rose to 4.704% from 4.634%.

US stocks initially rose on a report on US housing starts that suggested more momentum in the housing sector recovery, but turned down on Cyprus-related worries.

In midday trade the Dow Jones Industrial Average was off 0.20% at 14,423.10 points.

The broad-based S&P 500 shed 0.50% to 1,544.41, while the tech-rich Nasdaq Composite Index fell 0.46% to 3,222.68.

Banking shares took the largest hits in European trading.

In Madrid, Spanish bank Santander fell 3.64% to €5.618, UniCredit in Italy dropped 2.83% to €1.166.

Elsewhere, BNP Paribas had lost 4.2% to €40.95 in Paris and Barclays bank was down by 2.76% in London at 297.50 pence. In Germany, Deutsche Bank shares tumbled 4.35% to €32.

Source: Caye Global News, Gulf Times/AFP London

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