Markets: Banks bear brunt of Cypriot woes

THE FTSE 100 managed to weather the storm from Cyprus today with a loss of just 0.5 per cent but banking stocks suffered amid concerns that plans to tax depositors for a bailout could set a precedent.

London’s top index was down 31.7 points at 6,457.9 as economists tried to fathom the possible repercussions of the island’s €5.8 billion (£5bn) windfall tax, details of which were still being hammered out by the country’s parliament.

Nick Dale-Laceat CMC Market said: “After suffering sharp early losses in the face of eurozone plans to pick pocket the citizens of Cyprus, European indices reclaimed much of the lost ground, as investors took the view that a European banking run was unlikely in the short term.”

Banks suffered the brunt of the uncertainty, with Barclays off 14.1p at 305.95p, Lloyds 0.7p lower at 49.85p and Royal Bank of Scotland down 10.6p at 297.3p. The pound added about 1 per cent against the euro at €1.16 as the single currency weakened in the face of the crisis.

Shares in Marks & Spencer were up almost 7 per cent following a weekend newspaper report that the Qatar Investment Authority was mulling an £8bn bid approach. The stock added 25.6p to 398.1p even though there was no official stock market announcement to confirm or deny the speculation and Qatari sources denied interest.

Sainsbury’s, which is 25 per cent owned by Qatari funds and is due to issue a trading update today, rose 2.4p to 365.2p, while M&S rival Next added 44p to 4,134p.

Outside the top flight, oil rig engineer Lamprell was down 2 per cent at 144.5p after it was fined £2.4 million for failing to keep the market fully informed of its deteriorating financial position last year.

NEW YORK: Wall Street dropped tonight, after the plan to tax bank accounts in Cyprus to pay for the country’s bailout stoked worries that it could threaten the stability of financial institutions in the eurozone.

The Dow Jones industrial average fell 62.05 points, or 0.43 per cent, to end at 14,452.06 while the broader S&P 500 closed down 8.60 points or 0.55 per cent, at 1,552.10. The Nasdaq Composite dropped 11.48 points or 0.35 per cent, to close at 3,237.59.