Stocks tumble over Cyprus tax

Asian Pacific stock markets fell Monday amid widespread worries over a Cyprus bailout package seen to escalate the eurozone crisis.

A tax on depositors' savings in Cyprus as agreed among international lenders and the government in Nicosia rattled investors who feared the move, if passed by parliament, could set a precedent for future euro area bailouts.

Japan's benchmark Nikkei 225 Stock Average lost 2.71 percent, while the broader-based Topix index was down 2.22 percent. Hong Kong's Hang Seng index dipped 2.15 percent, with Australia's S&P/ASX 200 also dropping by more than 2 percent.

Little trust in Brussels

European stocks also pointed downwards sharply in early Monday trading. London's FTSEurofirst 300 was down 1.2 percent minutes after trading started, with banking stocks easing by 2.4 percent. Germany's blue-chip DAX 30 was down about 1.5 percent within minutes.

"Despite reassurances from Brussels that Cyprus is a special case and that indiscriminate levies won't be a common policy tool, depositors across Europe are fearing that a new precedent has been set for other debt-laden eurozone countries," Capital Spreads dealer Jonathan Sudaria said in a note.

The controversial tax is designed to help bolster the ailing banking sector in Cyprus and strengthen public finances. It is also a prerequisite for the nation to receive a 10 billion euro ($13 billion) bailout from international lenders. Cypriot President Nicos Anastasiades warned that without a rescue package the financial sector would collapse and plunge Cyprus into bankruptcy.

hg/dr (dpa, Reuters)