* Top official says Cyprus is new template for euro zone
* Stocks wipe out gains after initial optimism over Cyprus
* Dell says two new proposals could be superior to
* Apollo Group rallies after results beats estimates
* Indexes down: Dow 0.3 pct, S&P 0.1 pct, Nasdaq 0.2 pct
By Ryan Vlastelica
NEW YORK, March 25 (Reuters) - U.S. stocks fell on Monday as
initial optimism over a bailout for Cyprus gave way to investor
worries that the euro zone would shift the burden of aiding weak
banks to depositors, bondholders and others instead of to
governments and taxpayers.
The Cyprus deal was previously called a one-time solution to
debt problems, but investors grew cautious after Jeroen
Dijsselbloem, who heads the Eurogroup of euro zone finance
ministers, told Reuters and the Financial Times that the Cyprus
bailout deal could be a new template for resolving euro zone
The Dutch finance minister said if banks needed
restructuring and were unable, then euro zone officials would
turn to shareholders, bondholders and uninsured depositors to
contribute to a bank rescue.
The approach described by Dijsselbloem would be a radical
departure for euro zone policy after three years of crisis in
which taxpayers across the region have effectively been on the
hook for resolving problem banks and indebted governments.
"The fire in Europe hasn't been completely put out, though
it has been tapered," said John Carey, portfolio manager at
Pioneer Investment Management in Boston.
Reacting to Dijsselbloem, Carey added, "There would be some
unease if these problems persisted or got out of control."
The deal between Cyprus and the heads of the European Union,
the European Central Bank and the International Monetary Fund
will spare the Mediterranean island a likely banking collapse by
winding down the largely state-owned Popular Bank of Cyprus and
shifting deposits below 100,000 euros to the Bank of Cyprus to
create a "good bank."
Uninsured depositors in the Bank of Cyprus will have their
accounts frozen while the bank is restructure and recapitalized.
Banking shares were among the ones hurt most by the
Dijsselbloem comments. Shares of Morgan Stanley fell 1.3
percent to $21.88 while Bank of America dropped 0.9
percent to $12.44.
The Dow turned lower after hitting another all-time high,
while the S&P 500 fell from levels that took it within a point
of its all-time closing high.
The Dow Jones industrial average was down 44.46
points, or 0.31 percent, at 14,467.57. The Standard & Poor's 500
Index was down 1.86 points, or 0.12 percent, at 1,555.03.
The Nasdaq Composite Index was down 5.56 points, or 0.17
percent, at 3,239.44.
At its session high, the Dow climbed above 14,547, its
highest ever, while the S&P was within one point of its closing
record of 1,565.15 set in October 2007.
The S&P has risen for 10 of the past 12 session, with both
negative weeks extremely slight, dipping less than 0.3 percent
in each, a sign that market momentum continues to be to the
Red Hat Inc fell 4.8 percent to $48.38 after
Jefferies cut its price target on the stock.
United Therapeutics Corp dropped 2.4 percent to
$59.46 after it said the Food and Drug Administration had
rejected its oral drug to treat hypertension for a second time.
Dell Inc said it received alternative proposals
from Blackstone and billionaire investor Carl Icahn that
could be superior to the $24.4 billion offer from founder
Michael Dell and private equity fund Silver Lake Partners last
month. Dell shares rose 2.8 percent to $14.53.
Merger and acquisition activity has been another of the
reasons for the stellar performance of stocks so far this year.
University of Phoenix owner Apollo Group rose 7.2
percent to $18.26 after it reported a better-than-expected
profit even as student sign-ups fell for the fourth straight
quarter. The stock was the biggest percentage gainer on the S&P