EUROPEAN NEWS: Europe stocks …euro slip on Cyprus bailout terms

Europe’s main stock markets lost ground and the euro fell under $1.30 yesterday on news that Cyprus might tax bank deposits as part of a controversial international bailout.

A man looks at financial information on a screen outside a bank in downtown Milan yesterday. Italian and Spanish yields jumped yesterday while German yields hit 2013 lows, with investors viewing the eurozone’s push for a levy on Cypriot bank savings in exchange for a bailout as a dangerous precedent.

After being down more than a percentage point in early trade, European exchanges gradually clawed their way back during the afternoon as the initial shock passed, with London’s FTSE 100 index of leading companies closing down 0.49% at 6,457.92 points.

In Frankfurt, the Dax 30 dropped 0.40% to 8,010.7 points, while in Paris the Cac 40 shed 0.48% to 3,825.47 points.

Elsewhere, Madrid’s Ibex 35 shares index fell 1.29% and Milan’s FTSE MIB sank 0.85% in value.

In midday trade in the US, the Dow Jones Industrial Average gave up 0.08% to 14,501.94 points, the broad-based S&P 500, which last week appeared poised to break its all-time record, declined 0.3% to 1,556.04 points and tech-rich Nasdaq Composite Index lost 0.2% to 3,242.63.

In foreign exchange activity, the European single currency plunged at one point to $1.2882 in Asian deals to the lowest point since December 10, 2012.

“Euro weakness has unsurprisingly been the central story today, with the single currency slipping the most in 14 months,” said Nick Dale-Lace at CMC Markets brokerage.

The euro later stood at $1.2977, down from $1.3075 late on Friday in New York.

Gold prices, meanwhile, rose to $1,603.75 an ounce on the London Bullion Market from $1,595.50 on Friday.

Terms for a desperately-needed €10bn ($13bn) bailout for Cyprus include a proposed levy on all deposits in the island’s banks. Deposits of more than €100,000 would be hit with a 9.9% charge, and 6.75% for anything below that threshold.

Markets were primarily concerned about the potential willingness of EU leaders to replicate the Cyprus actions in other member states if they are deemed successful, according to CMC Markets.

Shares in Spanish bank Santander fell by 2.33%, UniCredit in Italy was down by 3.61%, BNP Paribas lost 2.8% in Paris and Barclays Bank was down by 4.41% in London. In Germany, Deutsche Bank lost 1.88%.

In company news, meanwhile, Airbus, a unit of European aerospace giant Eads, unveiled a record order of 234 medium-range A320-series jets worth $23.8bn (€18.2bn) from the little-known private Indonesian carrier Lion Air.

Though now the world’s largest order ever, and hailed by French President Francois Hollande as “historic”, Eads shares shed 1.26% to €42.05 on what some traders put down to profit-taking after hitting a record high on Friday.

Source: Caye Global News, Gulf Times/AFP

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