European stocks down as Cyprus bailout offer hits financials
Milan slips 1% while spread jumps to 323 basis points18 March, 20:40
Investors were particularly negative on banking stocks after the precedent set in Cyprus where bank accounts with more than 100,000 euros are to be hit with a one-off tax of 9.9%.
The proposed Cyprus bailout marks the first time depositors are set to take losses and raised fears the move could be copied in other troubled economies, like Spain's and Italy's.
Following news of the Cyprus proposal, the spread between Italy's 10-year debt and its German counterpart jumped from Friday's close of 314 basis points to 334 basis points at market open.
After peaking at 344 basis points, the spread settled a bit at close, dropping to 323 points.
In Milan, the FTSE-Mib ended the day down 0.9% at 15,924.13, while Spain's IBEX 35 lost 1.3% at 8,507.80.
Paris's CAC 40 shaved 0.5% to 3,825.47, Frankfurt's DAX 30 dropped 0.4% to 8,010.70 and London's FTSE 100 ended down 0.5% to 6,457.92.
In Italy, shares in troubled lender Monte dei Paschi di Siena (MPS) dropped 5.03%, followed by UniCredit, down 3.51%, Intesa Sanpaolo, down 2.52% and UBI, down 2.51%.
Shares in STM, a producer of chips and processors for computers and mobile phones, jumped 5.4% after the company announced it was exiting a lossmaking joint venture with Sweden's Ericsson in a type of phone processor.
Of the other blue chips Telecom Italia lost 1.61% after it predicted a drop in phone traffic of some 3-5% for the current year.
Other industrials also gained, including Fiat (+1.38%), Finmeccanica (+2.32%) and Saipem (0.65%).