NERVOUS markets edged down yesterday as uncertainty around the outcome of the Cypriot negotiations and the ramifications for the future continued to cast a pall over European investor sentiment.
The euro slid against the dollar and against sterling over the course of the day’s trading.
Bond yields in safe haven countries like Germany and the UK fell as investors moved their money back out of crisis-struck nations.
And stock markets fell across Europe as worries spread about where the next blow might fall.
The cost of insuring against a Cypriot government default shot up from 6.55 per cent to 8.05 per cent, according to data from Markit.
At the same time the yields on Spanish 10-year government bonds edged up to 4.96 per cent while Italy’s increased to 4.63 per cent in signs that investors’ fear about the state of those countries’ finances has increased.
But UK gilt yields dipped to 1.9 per cent and Germany’s to 1.41 per cent as markets continued to trust their governments.
Stocks fell across the world with the Eurostoxx 50 down 0.74 per cent, the Spanish IBEX down 1.29 per cent, the FTSE100 down 0.49 per cent and the Dow Jones down 0.43 per cent.
Asian markets had been the first to react, with the Nikkei dropping 2.71 per cent.