Markets tumble over new fears for eurozone after Cyprus announces 10% tax on savers to fund bank bailout

by HUGO GYE, MailOnline
March 18, 2013

Stock markets tumbled this morning as investors reacted to the unprecedented raid on bank accounts in Cyprus.

The move was intended to ensure the stability of the island state’s economy, but instead there are fears it could plunge Europe back into crisis.

The FTSE 100, which soared to a five-year high in recent days, fell by more than one per cent after markets opened, with banking shares particularly suffering.

At 9am, the index stood at around 6,420, down more than 60 points.

Asian markets also fell, with Japan’s Nikkei ending the day down by 2.5 per cent.

Traders are worried that the precedent set by the Cyprus move could spark an exodus of capital from other fragile European economies and jeopardise the region’s tentative recovery.

Unlike the previous rescues for Greece, Portugal, Ireland, and Spanish banks, the proposed Cypriot bailout is the first one that dips into ordinary people’s savings.

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