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U.S. stocks sag with worry about Cyprus bailout plan

Mar. 19, 2013 @ 06:52 AM

NEW YORK — Stocks closed lower Monday on Wall Street as investors worried that a controversial proposal to seize money from depositors in Cyprus could set off another bout of anxiety over Europe’s shared currency.

The Dow Jones industrial average fell 62.05 points, or 0.4 percent, to 14,452.06. It had plunged as much as 110 points in the early going, briefly turned positive in the afternoon then fell back again in the last hour of trading.

The Standard & Poor’s 500 fell 8.60 points, or 0.6 percent, to 1,552.10 The Nasdaq composite dropped 11.48 points, or 0.4 percent, to 3,237.59.

European markets recovered most of an early slide and closed with modest losses. Yields on government bonds issued by Spain and Italy edged higher and the euro fell to a three-month low against the dollar.

The market rally that has pushed the Dow to record levels this year has been punctuated by concerns about the euro-region’s lingering debt crisis. The Dow fell 1.6 percent Feb. 25, its biggest wobble this year, after elections in Italy threw the country into political paralysis, endangering crucial economic reforms.

“Europe has got problems,” said Uri Landesman, president of Platinum Partners, a hedge fund. “You could get more stuff like this and the market isn’t priced to handle that.”

A weekend agreement between Cyprus and its European partners called for the government to raid bank accounts as part of a (euro) 15.8 billion ($20.4 billion) financial bailout, the first time in the euro zone crisis that the prospect of seizing individuals’ savings has been raised. The measures are stoking fears of bank runs in the other 16 nations that use the euro.

Cypriot authorities, facing an uproar, delayed a parliamentary vote on the seizure and ordered the country’s banks to remain closed until Thursday while they try to modify the deal to lessen the impact on small depositors.
 

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