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FTSE recovers as markets await Cyprus' next move
by Gavin Lumsden on Mar 20, 2013 at 09:08
Hopes that Cyprus could strike a better deal with the eurozone helped the FTSE 100 break a three-day losing streak.
The UK’s top share index gained 27 points, or 0.4%, to 6,468, in response to the Cypriot parliament’s rejection last night of the controversial deposit levy at the heart of last weekend’s bailout plan.
In Europe the FTSE Eurofirst 300 recovered 0.4% to 1,200 points.
Although the rejection of the bailout risks pushing Cyprus into bankruptcy, investors were buoyed by the European Central Bank saying after the vote that it remained committed to providing liquidity to the island’s banks.
However, the danger of a run on Cyprus’ banks when they do reopen is grave. There is a serious risk that this could destabilize Italy and Spain, prompting sharp criticism of the authorities’ handling of the crisis. See today’s ‘Troika out’ comment piece by Robert Kyprianou.
Mike van Dulken, head of research at Accendo Markets, said with all the attention on Cyprus the chancellor’s Budget will take second place today. ‘That’s likely good news for him, with distractions welcome as he likely announces another batch of bad news, with stagnant growth continuing to hinder deficit and public debt targets, yet again, inflation squeezing household and now life without the prized AAA rating.’
Royal Bank of Scotland (RBS.L) was up 1.6% to 298p after Liberum raised its recommendation from ‘hold’ to ‘buy’.
On the mid cap index, Greggs (GRG.L) was down 6.2% to 491p after announcing a 2.2% decline in 2012 pre-tax profits amid ‘challenging market conditions’.
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