London open: Sentiment fragile in aftermath of Cypriot bailout

19th Mar 2013 08:28

Markets across Europe were mixed in early trading on Tuesday as traders continue to digest developments in Cyprus after the controversial proposal to tax depositors prompted fears of a bank run yesterday.Weighing on London's resource-heavy FTSE 100 this morning was Goldman Sachs' move to lower its rating for several mining stocks.Markets still digesting Cypriot bailoutAs part of its €10bn aid package at the weekend, Cyprus proposed imposing a levy on customer accounts, forcing a 'bail-in' of depositors with banks in an attempt to raise nearly €5.8bn in funds. The move, unsurprisingly, was met with significant voter backlash, with ATMs across the country being rinsed of cash. Concerns about a potential bank run have now subsided - Cyprus has declared a bank holiday today and tomorrow to "safeguard the stability of the financial sector" - as the move still needs the approval in parliament to be pushed through.With the government continuing to delay the vote on the one-off tax, markets are now concerned that the nation is being pushed closer to default and a banking collapse.The Eurogroup said yesterday evening that it will allow authorities to introduce "more progressivity" compared to what was agreed at the weekend but has not budged on its €5.8bn revenue target.Situation in Cyprus "unique"Analyst Philip Shaw from Investec explained that yesterday's market reaction to the tax on depositors moderated through the course of the day, with the prevailing view that the situation in Cyprus is "unique" and not a indication of what will play out in other Eurozone peripheral nations, echoing comments made yesterday by European Central Bank member Jörg Asmussen.Shaw said: "The size of the Cypriot banking system is huge, amounting to over 800% of annual GDP. While it is creaking principally due to its exposure to Greece (which begs the question of why senior bond holders are being spared), the international authorities are well known to be highly critical of the Cypriot authorities' relatively 'relaxed' approach to widespread money laundering and tax evasion."The structure of the bailout and its focus on the deposit levy therefore reflects Cyprus's exceptional circumstances and does not in our view represent a precedent to other possible operations elsewhere."Miners tank early on; Sainsbury gains after updateMining stocks were dominating the fallers list on the FTSE 100 early on with Rio Tinto and BHP Billiton both hit by a downgrade by Goldman. Citi was also pressuring miners lower after cutting its estimates for iron ore prices on concerns of over-supply. EVRAZ, Fresnillo, Xstrata, Glencore and Antogasta were heavy fallers.Supermarket giant Sainsbury jumped after beating forecasts with its fourth-quarter sales as the firm saw customer transactions grow to a record 22.9m per week. Chip designer ARM Holdings was in the red after its CEO Warren East called its quits after nearly 12 years as frontman. He will be replaced by ARM's current President Simon Segars.FTSE 100 - RisersSainsbury (J) (SBRY) 375.80p +2.90%Vodafone Group (VOD) 187.65p +1.46%United Utilities Group (UU.) 693.00p +1.32%Diageo (DGE) 2,033.50p +1.02%GlaxoSmithKline (GSK) 1,504.00p +0.87%Capita (CPI) 900.50p +0.78%BT Group (BT.A) 272.90p +0.78%National Grid (NG.) 740.50p +0.75%Shire Plc (SHP) 2,030.00p +0.74%Severn Trent (SVT) 1,657.00p +0.73%FTSE 100 - FallersEvraz (EVR) 233.20p -4.62%Fresnillo (FRES) 1,391.00p -4.46%Rio Tinto (RIO) 3,148.50p -3.92%Weir Group (WEIR) 2,337.00p -3.87%BHP Billiton (BLT) 1,985.00p -3.36%Polymetal International (POLY) 857.50p -2.61%Carnival (CCL) 2,273.00p -2.15%Anglo American (AAL) 1,835.00p -2.06%Vedanta Resources (VED) 1,109.00p -2.03%ARM Holdings (ARM) 902.50p -1.96%FTSE 250 - RisersStobart Group Ltd. (STOB) 86.75p +4.52%Computacenter (CCC) 538.00p +1.89%Carpetright (CPR) 668.50p +1.83%United Drug (UDG) 267.60p +1.75%Inmarsat (ISAT) 698.00p +1.53%Homeserve (HSV) 231.10p +1.49%Berkeley Group Holdings (The) (BKG) 2,065.00p +1.42%Raven Russia Ltd (RUS) 74.00p +1.37%St James's Place (STJ) 524.00p +1.35%Menzies(John) (MNZS) 790.50p +1.35%FTSE 250 - FallersFerrexpo (FXPO) 185.00p -6.42%Petra Diamonds Ltd.(DI) (PDL) 119.80p -4.24%Kazakhmys (KAZ) 487.90p -3.48%Domino Printing Sciences (DNO) 681.00p -2.71%Essar Energy (ESSR) 149.40p -2.54%Lonmin (LMI) 310.00p -2.24%Heritage Oil (HOIL) 186.00p -2.11%Afren (AFR) 147.60p -1.99%Bumi (BUMI) 327.50p -1.80%Henderson Group (HGG) 165.30p -1.61%BC