Cyprus jitters keep Asian shares, euro pressured

by Ian Chua, Reuters
March 20, 2013

SYDNEY | Asian shares extended losses on Wednesday and investors gave the euro a wide berth after a bailout deal for Cyprus was thrown into disarray.

Cyprus’s parliament overwhelmingly rejected a proposed tax on bank deposits as a condition for bailout aid, pushing the Mediterranean island a step closer to the brink of financial meltdown.

The European Central Bank offered some comfort by saying it was committed to providing liquidity within certain limits, even after having threatened to end emergency lending assistance for teetering Cypriot banks.

“It seems like you’re going to have a run of negative press over the next few days at least. So until this plays out and until that cloud is dealt with, it’s going to be hard to get too optimistic on the outlook in the near term,” said Michael Turner, strategist at RBC in Sydney.

The MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS shed 0.3 percent, extending a 1.7 percent slide on Tuesday. The index is now down around 3 percent from its 2013 peak set a month ago.

South Korean shares .KS11 lost 0.3 percent, while their Australian counterparts .AXJO fell 0.4 percent. Japanese financial markets had a reprieve thanks to a public holiday there.

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