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European shares fall as Cyprus bailout relief fades

Source : REUTERS
Last Updated: Mon, Mar 25, 2013 16:40 hrs

LONDON, March 25 (Reuters) - European shares fell on Monday, led lower by financial stocks, as relief over a Cyprus bailout faded after the Dutch Finance Minister said the stern deal could set a new template for the region.

The pan-European FTSEurofirst 300 index provisionally closed down 0.1 percent at 1,188.09 points, having been up 0.9 percent at one stage, while the euro zone's blue-chip Euro STOXX 50 index fell 1.1 percent to 2,651.23 points.

Dutch Finance Minister Jeroen Dijsselbloem, who heads the Eurogroup of euro zone finance ministers, told Reuters and the Financial Times that the Cyprus rescue represented a new template for resolving euro zone banking problems and other countries may have to restructure their banking sectors.

This raised worries that other debt-ridden countries with troubled banks may face similarly punitive measures as Cyprus, which agreed to close down its second-largest bank and inflict heavy losses on big depositors.

"The action taken sets a dangerous precedent. I just think there's still a little sense of unease," said Berkeley Futures associate director Richard Griffiths.

Griffiths said clients were looking to buy "put" options on the German DAX equity index, which give the right to sell an index in the future and are often used on expectations of a market fall.

He said investors had taken DAX "puts" due to mature in April with a strike price of 7,700 points - implying that some investors saw a 2 percent fall on the DAX in the coming month.




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