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| Europe markets follow Asia's down after Cyprus bailout deal | Europe markets follow Asia's down after Cyprus bailout deal |
| (35 minutes later) | |
| European markets have followed Asian shares downward on fears that the plan to bailout Cyprus could trigger an escalation of the eurozone debt crisis. | European markets have followed Asian shares downward on fears that the plan to bailout Cyprus could trigger an escalation of the eurozone debt crisis. |
| The EU and IMF want all bank customers to pay a levy in return for a bailout worth 10bn euros ($13bn; £8.6bn). | The EU and IMF want all bank customers to pay a levy in return for a bailout worth 10bn euros ($13bn; £8.6bn). |
| London's 100 share index is 1% lower, while Spain and Italy are down 2%. | London's 100 share index is 1% lower, while Spain and Italy are down 2%. |
| The euro was also affected. Against both the pound and the dollar, it lost about 1%, leaving it at 85.6p and $1.295 respectively. | |
| Earlier, Japan's Nikkei 225 index fell 2.7%, while Hong Kong's Hang Seng and Australia's ASX 200 dipped 2%. | Earlier, Japan's Nikkei 225 index fell 2.7%, while Hong Kong's Hang Seng and Australia's ASX 200 dipped 2%. |
| Banking shares were among the hardest-hit, with Italy's UniCredit losing almost 5%, while Intesa Sanpaolo was down 4%. Banco Popolare, which announced a bigger-than-expected annual loss on Friday after the market closed, was almost 5% lower. | Banking shares were among the hardest-hit, with Italy's UniCredit losing almost 5%, while Intesa Sanpaolo was down 4%. Banco Popolare, which announced a bigger-than-expected annual loss on Friday after the market closed, was almost 5% lower. |
| France's BNP Paribas and Credit Agricole were both down more than 4%. | |
| In Germany, Deutsche Bank was down 3.5% while Commerzbank was 1.6% lower. | |
| 'Confusion' | 'Confusion' |
| Developments in Cyprus have unsettled some investors and depositors in other, bigger, eurozone economies. | Developments in Cyprus have unsettled some investors and depositors in other, bigger, eurozone economies. |
| "The unprecedented move is an extreme measure and in our view, it will spread some panic... we cannot rule out some capital outflows," said Annalisa Piazza of Newedge Strategy. | "The unprecedented move is an extreme measure and in our view, it will spread some panic... we cannot rule out some capital outflows," said Annalisa Piazza of Newedge Strategy. |
| She suggests that it could drive up the cost of borrowing for some other weaker, eurozone economies in the short term. | She suggests that it could drive up the cost of borrowing for some other weaker, eurozone economies in the short term. |
| Government bond yields - the implied interest rate that countries pay to borrow money - rose for weaker eurozone economies, in an indication that investors see higher risks. | Government bond yields - the implied interest rate that countries pay to borrow money - rose for weaker eurozone economies, in an indication that investors see higher risks. |
| Cyprus's seven-year bond yield jumped by more than 1.5 percentage points to just over 10%. | |
| Italian and Spanish government bond yields rose by far less - and after rising by more than 0.1 percentage points, 10-year yields for Italy were at 4.65%, while Spanish 10-year yields were at 4.9%. | |
| Some investors think the Cyprus plan could prompt depositors elsewhere, particularly in Greece, Portugal, Ireland, Italy, Greece and Spain, to withdraw their capital. | |
| But the European Central Bank board member, Joerg Asmussen, said he did not think Cyprus's problems would spread to other eurozone countries: "I do believe that the situation of Cyprus and the Cypriot banking sector is indeed unique." | |
| Some analysts also suggested the affects on other eurozone countries will be limited. | |
| "I doubt that the case in Cyprus will trigger contagion risks across the eurozone, as the size of the country is too small and its industrial structure is very different from other eurozone members, in that Cyprus is dependent on just tourism and the financials sector," said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo. | "I doubt that the case in Cyprus will trigger contagion risks across the eurozone, as the size of the country is too small and its industrial structure is very different from other eurozone members, in that Cyprus is dependent on just tourism and the financials sector," said Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo. |
| David Cumming of Standard Life told BBC News: "I don't think it will have a lasting impact, I think it's an excuse for a correction after a strong run-up." | David Cumming of Standard Life told BBC News: "I don't think it will have a lasting impact, I think it's an excuse for a correction after a strong run-up." |
| He said people trusted the EU's mechanisms for maintaining stability in the eurozone: "I don't see a destabilisation of bank deposits across Europe. I don't see any impact for more than a few days in the market." | He said people trusted the EU's mechanisms for maintaining stability in the eurozone: "I don't see a destabilisation of bank deposits across Europe. I don't see any impact for more than a few days in the market." |
| Dipping | Dipping |
| This is the first time the 17-nation eurozone has sanctioned dipping into people's savings to finance a bailout. | This is the first time the 17-nation eurozone has sanctioned dipping into people's savings to finance a bailout. |
| The plan is yet to be finalised, but the news of the deal caused a rush to the cash machines in Cyprus as people tried to withdraw money. | The plan is yet to be finalised, but the news of the deal caused a rush to the cash machines in Cyprus as people tried to withdraw money. |
| Under the levy, bank customers with less than 100,000 euros would have to pay 6.75%, while those with more than 100,000 euros would pay 9.9%. | Under the levy, bank customers with less than 100,000 euros would have to pay 6.75%, while those with more than 100,000 euros would pay 9.9%. |
| The banks in Cyprus were closed on Monday for a scheduled Bank Holiday, the timing of which prompted the authorities to introduce the plan. | The banks in Cyprus were closed on Monday for a scheduled Bank Holiday, the timing of which prompted the authorities to introduce the plan. |
| Individuals are therefore unable to make over-the-counter transactions and some cash machines have already run out of money. | |
| However, depositors in Cypriot banks outside the country, including in Greece, are unaffected by the levy. | However, depositors in Cypriot banks outside the country, including in Greece, are unaffected by the levy. |
| But the plan is yet to be finalised and Cyprus's leaders have said they want to ensure protection for small investors. | But the plan is yet to be finalised and Cyprus's leaders have said they want to ensure protection for small investors. |
| Meanwhile, an emergency session of the Cypriot parliament has been postponed until later on Monday. | Meanwhile, an emergency session of the Cypriot parliament has been postponed until later on Monday. |
| Also, Germany must approve the plan, but is not due to vote until next month. | Also, Germany must approve the plan, but is not due to vote until next month. |
| Following eurozone finance ministers' negotiations last week, Cyprus became the fifth euro-area country to get a bailout to save its banks, which suffered significant losses because of their exposure to Greek debt. | Following eurozone finance ministers' negotiations last week, Cyprus became the fifth euro-area country to get a bailout to save its banks, which suffered significant losses because of their exposure to Greek debt. |