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LONDON (MarketWatch) — European stock markets staged broad-based losses on Monday, after a bailout proposal for Cyprus, including a controversial levy on bank deposits, stoked fears that other struggling countries would follow the same path.
The Stoxx Europe 600 index (XX:SXXP) lost 0.2% to close at 296.81.
The losses mirrored a weak trading day in Asia along with softness for U.S. stocks, on the back of 10 billion euro ($12.9 billion) deal to bail out Cyprus announced over the weekend.
U.S. stocks open sharply lower on Cyprus deposit tax.
The bailout agreement came with an unprecedented levy on bank deposits, with depositors with more than €100,000 euros taxed at 9.9%, while those with less at 6.75%, marking the first time in the euro-zone crisis that depositors will lose money and raising fears such measures could spread to other struggling euro-zone nations. Here’s why markets are in an uproar over Cyprus deposit tax
A vote on the bailout was reportedly pushed back a day, as President Nicos Anastasiades, who has been in parliamentary meetings in Nicosia, reportedly wants the terms of the deal amended.
“Should depositors in Cyprus or other peripheral countries feel safe now? They may not. After all, deposit-guarantee schemes do not guarantee against a levy. Depositors may also have to factor in that the one-off levy could inspire national governments to do the same thing. So the risk of bank runs has just gone up,” analysts at Danske Bank said in a note.
ATMs in Cyprus were reportedly already running out of cash over the weekend, as depositors tried to avoid the tax.
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http://articles.marketwatch.com/2013-03-18/markets/37794902_1_european-stock-president-nicos-anastasiades-cyprus
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