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Sharp drops in shares in Europe. Markets have been rattled by a radical bailout plan for Cyprus. Euro zone leaders agreed ...
to tax bank deposits there to help fund a bailout. That's knocked confidence in European banks. Some traders are now worried this might just be the start.
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Sharp drops in shares in Europe. Markets have been rattled by a radical bailout plan for Cyprus. Euro zone leaders agreed to tax bank deposits there to help fund a bailout. That's knocked confidence in European banks. Some traders are now worried this might just be the start. (SOUNDBITE) (French) MONTSEGUR ASSET MANAGER FRANCOIS CHAULET SAYING: "There are other countries where the banking sector is still in difficulty and where it's easy to imagine another bank run, where savers could go to the bank and try to withdraw funds, just in case this kind of measure was put in place there." The euro and bonds for southern European countries were also down. Three of Europe's main indices followed losses in Asia while Europe's main volatility index, used to measure risk, surged more than 20 percent. Safe-haven assets like gold and German government bonds jumped. But Daiwa Capital's Michael Symonds says the real threat is what happens next. SOUNDBITE: Daiwa Capital Credit Analyst, Michael Symonds, saying (English): "We should still view Cyprus as certainly a unique case, but I think clearly the risk is what happens down the line should further banking sector restructuring and recapitalisation be required in peripheral markets." Markets have been relatively calm since the ECB intervened in the debt crisis last year. If investors see any sign of contagion from Cyprus that could soon be shattered.