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European shares decline on Cyprus worries
March 24, 2013
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LONDON: European stocks posted the biggest weekly decline in four months as a proposal to impose a levy on bank deposits in Cyprus sparked concern it would set a precedent for other euro-area economies seeking aid.

National Bank of Greece and Banco Popular Espanol paced losses among lenders. Lanxess tumbled 11 per cent after predicting a drop in profit this quarter. Barratt Developments Plc and Persimmon pushed UK homebuilders higher after Britain announced a new plan to support housing.

The benchmark Stoxx Europe 600 Index fell 1.1 per cent to 294.04 this week, the biggest drop since Nov.16. The measure has still gained 5.1 per cent so far this year as US lawmakers agreed on a compromise budget and reports on housing and jobs fueled optimism the world’s largest economy is recovering.

“The capacity for European stock markets to outperform strongly during 2013 has been dealt a blow by the reminder that European tail risks can flare up quickly and knock investor confidence,” John Bilton, European investment strategist at Bank of America Corp.’s Merrill Lynch unit, wrote in a note. Without “a quick resolution to the crisis and a clear statement from policy makers that Cyprus is unique, there is likely to be a lingering impact on confidence,” he added. National benchmark indexes retreated in all the 18 western European markets this week, except Ireland.

The UK’s FTSE 100 fell 1.5 per cent. France’s CAC 40 slid 1.9 per cent and Germany’s DAX Index slipped 1.6 per cent. Greece’s ASE Index tumbled 3.1 per cent, while the stock market in Cyprus was closed all week. Cypriot President Nicos Anastasiades on March 16 agreed to a demand by the euro area’s finance ministers to raise 5.8 billion euros ($7.5 billion) by imposing a charge on every bank account in the country.

Bloomberg

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