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| Stock markets fall despite Cyprus deal | Stock markets fall despite Cyprus deal |
| (35 minutes later) | |
| European and US stock markets have fallen despite the agreement of a bailout deal for Cyprus. | European and US stock markets have fallen despite the agreement of a bailout deal for Cyprus. |
| Earlier, European markets had risen sharply following news of the deal, which was agreed late on Sunday. | Earlier, European markets had risen sharply following news of the deal, which was agreed late on Sunday. |
| But comments by one European finance minister, suggesting that the Cyprus deal could form the template for future bailouts, damaged market sentiment. | But comments by one European finance minister, suggesting that the Cyprus deal could form the template for future bailouts, damaged market sentiment. |
| By 15:30 GMT, all major European markets had fallen into negative territory, joined by US stocks. | By 15:30 GMT, all major European markets had fallen into negative territory, joined by US stocks. |
| Earlier, hopes that the Cyprus deal would prevent the crisis spreading to the rest of the eurozone had boosted shares, following rises in the Asian markets. | Earlier, hopes that the Cyprus deal would prevent the crisis spreading to the rest of the eurozone had boosted shares, following rises in the Asian markets. |
| Cyprus will receive 10bn euros ($13bn; £8.5bn) in bailout funds, but has agreed to a major restructuring of its banks. | Cyprus will receive 10bn euros ($13bn; £8.5bn) in bailout funds, but has agreed to a major restructuring of its banks. |
| Deposits in those banks above 100,000 euros are also likely to be used to pay for part of the bailout, with the Cypriot government suggesting that such account holders should expect to lose about 30% of their balances. | Deposits in those banks above 100,000 euros are also likely to be used to pay for part of the bailout, with the Cypriot government suggesting that such account holders should expect to lose about 30% of their balances. |
| Despite the earlier share rises, markets in Europe and the US appeared to react negatively when Jeroen Dijsselbloem, the Dutch Finance Minister involved in the Cyprus negotiations, said the deal represented a new template for resolving future eurozone banking problems. | Despite the earlier share rises, markets in Europe and the US appeared to react negatively when Jeroen Dijsselbloem, the Dutch Finance Minister involved in the Cyprus negotiations, said the deal represented a new template for resolving future eurozone banking problems. |
| He also said other countries may have to restructure their banks. | He also said other countries may have to restructure their banks. |
| The UK's FTSE 100 index ended the day down 0.2%, while Germany's Dax gave up 0.5%, and France's Cac lost 1.1%. In New York, the Dow Jones was 0.5% lower. | |
| The euro was also driven lower, falling to a six-week low against the pound. The euro was down 0.6% to 84.74 pence. | The euro was also driven lower, falling to a six-week low against the pound. The euro was down 0.6% to 84.74 pence. |
| Significant obstacles | Significant obstacles |
| The new deal for Cyprus, unlike previous agreements, does not require the approval of the Cypriot parliament. | The new deal for Cyprus, unlike previous agreements, does not require the approval of the Cypriot parliament. |
| The uncertainty over the future of Cyprus in the eurozone was sparked a week ago when its parliament rejected an earlier bailout deal, which also included a controversial bank levy. | The uncertainty over the future of Cyprus in the eurozone was sparked a week ago when its parliament rejected an earlier bailout deal, which also included a controversial bank levy. |
| Despite the Cypriot economy's relatively small size, many analysts had been concerned that the crisis would spread to the wider eurozone, had Cyprus been forced to give up the single currency. | Despite the Cypriot economy's relatively small size, many analysts had been concerned that the crisis would spread to the wider eurozone, had Cyprus been forced to give up the single currency. |
| There were fears that the country's possible exit from the euro would trigger a loss of confidence across the single currency bloc, and prompt investors to withdraw from other troubled economies, such as Greece. | There were fears that the country's possible exit from the euro would trigger a loss of confidence across the single currency bloc, and prompt investors to withdraw from other troubled economies, such as Greece. |
| However, while Cyprus is now likely to remain in the eurozone, the country still faces significant obstacles as it attempts to recover from the crisis. | However, while Cyprus is now likely to remain in the eurozone, the country still faces significant obstacles as it attempts to recover from the crisis. |
| The EU-IMF deal involves a massive restructuring of the Cypriot banking system, as well as austerity measures and tax increases. | The EU-IMF deal involves a massive restructuring of the Cypriot banking system, as well as austerity measures and tax increases. |
| There has also been significant public anger in Cyprus at the intervention of European authorities, and the credibility of the Cypriot government has been questioned. | There has also been significant public anger in Cyprus at the intervention of European authorities, and the credibility of the Cypriot government has been questioned. |
| "We see a risk that Cyprus' sovereign debt burden post-bailout might not be sustainable, as the country is likely to enter a deep recession caused by the shrinkage of the banking sector and severe deleveraging," warned Reinhard Cluse, an economist at UBS. | "We see a risk that Cyprus' sovereign debt burden post-bailout might not be sustainable, as the country is likely to enter a deep recession caused by the shrinkage of the banking sector and severe deleveraging," warned Reinhard Cluse, an economist at UBS. |