Markets steady after being roiled by EU confusion

Stocks, euro steady after official stokes confusion over EU's bailout approach

Associated Press
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A worker restores a damaged door of a branch of a Bank of Cyprus after a bomb attack at Polemidia a suburb of the southern port city of Limassol, Cyprus, early Monday, March 25, 2013. After failing for a week to find a solution to a crisis that could force their country into bankruptcy, Cypriot politicians turned to the European Union on Sunday in a last-ditch effort to help the island nation forge a viable plan to secure an international bailout. (AP Photo/Pavlos Vrionides)

LONDON (AP) -- Markets were generally steady Tuesday as European officials attempted to douse concerns that the main thrust of Cyprus' bailout — a raid on deposits — could be used again in the future.

On Monday, markets were roiled by a suggestion from Jeroen Dijsselbloem, who chairs the meetings of the finance ministers of the 17 European Union countries that use the euro, that the Cyprus bailout was a template for future rescue plans.

Though he later attempted to retract his comments and described Cyprus as a "specific case with exceptional challenges," Dijsselbloem left the impression that those with bank deposits above the uninsured level of 100,000 euros ($129,000) may be tapped in any new bailouts.

Other European officials, such as Greek finance minister Yannis Stournaras and European Central Bank policymaker Benoit Coeure, sought Tuesday to ease fears that the Cyprus bailout strategy will be repeated, but investors remained wary and markets were only back where they were when Dijssselbloem's first comments were aired.

"The damage has been done and it's going to be very difficult for Dijsselbloem or any other officials to fix this in the short term," said Craig Erlam, market analyst at Alpari.

In Europe, the FTSE 100 index of leading British shares closed up 0.3 percent at 6,399 while Germany's DAX rose 0.1 percent to 7,879. The CAC-40 in France was 0.5 percent higher at 3,748.

The euro was unchanged at $1.2852. In the immediate aftermath of the Cypriot bailout on Monday morning, Europe's single currency had managed to race above $1.30.

The focus will likely remain on the fallout from the Cyprus deal, especially as the country's banks are all scheduled to stay closed until Thursday.

Before a late Monday night decision, all but the Bank of Cyprus and Laiki, were due to reopen on Tuesday, having been closed for 10 days. No reason has been given for the further delay but fears of a bank run are thought to have played a role in the decision.

"Continued uncertainty within the eurozone is likely to limit gains," said Lee Mumford, a financial sales trader at Spreadex.

On Wall Street, the Dow Jones industrial average was up 0.6 percent at 14,358 while the broader S&P 500 index rose 0.5 percent to 1,560.

Investors in the U.S. appeared to brush off a mixed batch of data. While government figures showed that factory orders surged in February, a survey of consumer sentiment from the Conference Board revealed underlying pessimism.

Earlier in Asia, Japan's Nikkei 225 index fell 0.6 percent to close at 12,471.62. Hong Kong's Hang Seng rose 0.3 percent to 22,311.08. Australia's S&P/ASX 200 dropped 0.8 percent to 4,950.20. South Korea's Kospi rose 0.3 percent to 1,983.70.

Mainland Chinese shares fell, with the Shanghai Composite Index losing 1.2 percent to 2,297.67 while the smaller Shenzhen Composite Index lost 0.7 percent to 953.36. Losses were attributed to moves by the government to cool off the real estate sector.

Oil prices edged higher alongside most global equities, with the benchmark New York rate up 82 cents at $95.63 a barrel.

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