Cyprus tax plan sparks sharp sell-off

THE TOP share index fell almost one per cent this morning, led by headline banking shares, as news that Cyprus planned to impose a tax on bank deposits spooked investors.

In a radical departure from previous aid packages, Eurozone finance ministers want Cyprus savers to forfeit a portion of deposits in return for a €10bn (£8bn) bailout.
Banks, large holders of deposits within the Eurozone, fell 1.7 per cent on concerns over their exposure to any turmoil and the knock-on effect within the region.
Barclays was a big faller in early trading, shedding 3.4 per cent. RBS followed suit, falling 3.3 per cent. HSBC was off 0.4 per cent and Lloyds Banking Group was down 1.75 per cent.
“Predictably the banking stocks find themselves at the bottom of FTSE performance list this morning as the market prices the entire European banking system lower on concerns that bank runs could spread across the continent,” said Matt Basi, head of UK sales trading at CMC Markets.
Headline natural resources shares also felt the heat in early deals. Eurasian Natural Resources – which this week is poised to release its full-year results – fell 4.15 per cent. Copper miner Kazakhmys also fell 3.4 per cent.
At the other end of the spectrum, Marks & Spencer rose more than seven per cent in early trading, following reports that the Qatar Investment Authority was in the early stages of putting together an £8bn bid.
Global markets also suffered falls, with Japan’s Nikkei closing 2.71 per cent down. In the US, the Dow Jones closed down 0.17 per cent.