European (SXXP) stocks tumbled the most in more than two weeks after the euro area forced Cyprus to adopt a levy on bank deposits, prompting concern that the single currency’s debt crisis will reignite. U.S. index futures and Asian shares also sank.
STMicroelectronics NV and Ericsson AB slid 1 percent and 2.1 percent, respectively, after agreeing to split up ST- Ericsson, their unprofitable chip venture. BHP Billiton Ltd. dropped 2.1 percent as metals prices fell in London. Commerzbank AG declined 1.9 percent after Credit Suisse Group AG lowered its recommendation on Germany’s second-largest bank.
The Stoxx Europe 600 Index fell 1.2 percent to 293.74 at 8:06 a.m. in London, its biggest drop since Feb. 26. Cypriot and Greek stock markets are closed for a holiday today. Futures on the Standard & Poor’s 500 Index slid 1.2 percent, while the MSCI Asia Pacific Index retreated 1.9 percent.
“The EU euphoria trade has run its course,” Guy Foster, who helps manage $39 billion as head of portfolio strategy at Brewin Dolphin Securities in London, said in a Bloomberg television interview. “This is another pretty significant event. If you wake up today and you’re a trader, you’re unlikely to put more risk into your portfolio.”
While Cyprus accounts for less than half a percent of the 17-nation euro area’s economy, the raid on bank accounts risks a resumption of the financial crisis that began in 2009 in Greece. Moody’s Investors Service said that the move limits support for bank creditors across Europe and shows that policy makers will risk disrupting financial markets to avoid sovereign defaults.
Cyprus’s President, Nicos Anastasiades, will try to persuade lawmakers to back the plan. The euro area’s bailout of the country fell to 10 billion euros ($13 billion) from an original figure of about 17 billion euros thanks to the levy.
Anastasiades will defend his decision to accept the levy at a parliamentary session beginning at 4 p.m. in Nicosia. The vote comes a day later than originally planned as Anastasiades sought to secure the majority he needs.
“Whilst the proposed levy still has to pass the parliament, such a blatant escalation of the euro-zone debt crisis is set to send traders fleeing from equities,” Jonathan Sudaria, a trader at Capital Spreads in London, wrote.
To contact the reporter on this story: Adria Cimino in Paris at [email protected].
To contact the editor responsible for this story: Andrew Rummer at [email protected].
STMicroelectronics NV and Ericsson AB slid 1 percent and 2.1 percent, respectively, after agreeing to split up ST- Ericsson, their unprofitable chip venture. BHP Billiton Ltd. dropped 2.1 percent as metals prices fell in London. Commerzbank AG declined 1.9 percent after Credit Suisse Group AG lowered its recommendation on Germany’s second-largest bank.
The Stoxx Europe 600 Index fell 1.2 percent to 293.74 at 8:06 a.m. in London, its biggest drop since Feb. 26. Cypriot and Greek stock markets are closed for a holiday today. Futures on the Standard & Poor’s 500 Index slid 1.2 percent, while the MSCI Asia Pacific Index retreated 1.9 percent.
“The EU euphoria trade has run its course,” Guy Foster, who helps manage $39 billion as head of portfolio strategy at Brewin Dolphin Securities in London, said in a Bloomberg television interview. “This is another pretty significant event. If you wake up today and you’re a trader, you’re unlikely to put more risk into your portfolio.”
While Cyprus accounts for less than half a percent of the 17-nation euro area’s economy, the raid on bank accounts risks a resumption of the financial crisis that began in 2009 in Greece. Moody’s Investors Service said that the move limits support for bank creditors across Europe and shows that policy makers will risk disrupting financial markets to avoid sovereign defaults.
Cyprus’s President, Nicos Anastasiades, will try to persuade lawmakers to back the plan. The euro area’s bailout of the country fell to 10 billion euros ($13 billion) from an original figure of about 17 billion euros thanks to the levy.
Anastasiades will defend his decision to accept the levy at a parliamentary session beginning at 4 p.m. in Nicosia. The vote comes a day later than originally planned as Anastasiades sought to secure the majority he needs.
“Whilst the proposed levy still has to pass the parliament, such a blatant escalation of the euro-zone debt crisis is set to send traders fleeing from equities,” Jonathan Sudaria, a trader at Capital Spreads in London, wrote.
To contact the reporter on this story: Adria Cimino in Paris at [email protected].
To contact the editor responsible for this story: Andrew Rummer at [email protected].