European stock markets opened sharply lower on Monday, after a bailout for Cyprus, including a controversial levy on bank deposits, announced over the weekend prompted uncertainty in global financial markets.
The Stoxx Europe 600 index lost 0.8% to 294.96.
The losses mirrored a weak trading day in Asia along with softness for most commodity futures, on the back of an agreement among Cyprus, the euro zone and the International Monetary Fund to hand the struggling Mediterranean country 10 billion euros.
“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.
In that vein, European banks posted some of the biggest losses, with shares of Italy’s UniCredit SpA down 4.7%, France’s Société Générale SA 4.4% lower and Banco de Sabadell SA off 4% in Madrid.
Among country-specific indexes, the southern European bourses posted the biggest drops. Italy’s FTSE MIB index dropped 2.2% to 15,702.93, while Spain’s IBEX 35 index lost 2.2% to 8,428.90.
France’s CAC 40 index shaved off 1.2% to 3,799.07, Germany’s DAX 30 index erased 1.1% to 7,955.04 and the U.K.’s FTSE 100 index lost 1% to 6,425.63.
(source: WSJ, Dow Jones, MarketWatch)
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