- Investors eye vote on Cyprus bank deposit levy
- Spain reaches top end of debt auction target
- Euro/dollar declines

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Stoxx 600: -0.55%

European equities were flashing red Tuesday for a third day running as markets focused on a proposed controversial bank deposit levy in Cyprus.

Cypriot lawmakers were due to meet late Tuesday to vote on whether to tax bank deposits in an effort to save the country's troubled economy.

The levy has raised concerns among investors about setting a precedent of raiding bank accounts.

Cyprus President Nicos Anastasiades told Sweden's TV4 channel that parliament would probably reject the proposal.

European leaders fear the country's debts will have a spillover effect on the rest of the bloc.

They have stressed there is no flexibility on the €5.8bn target required to win a European Union-led bailout.

However, Cypriot central bank governor Panicos Demetriades said the draft proposal on the levy would fail to meet the target agreed with international lenders.

Spain meets debt auction target

Spain pulled off a successful short-term sovereign debt auction Tuesday morning despite fears over the financial crisis in Cyprus.

The Spanish Treasury sold €4bn in T-bills, at the high end of its €3bn to €4bn target.

The country sold €1.74bn in three-month bills with a solid bid/cover ratio of 3.30, although it was lower than the prior print of 5.8.

Spain also sold €2.26bn in nine-month paper with the bid/cover rising to 2.40 from the previous level of 2.30.

Rio Tinto sees downward pressure on iron ore prices

Rio Tinto's shares plunged as the miner forecast a downward pressure on iron ore prices in the second half of 2013 and Goldman Sachs cut its rating on stocks to 'sell'.

ARM Holdings fell after announcing Chief Executive Officer Warren East will retire in July after almost 12 years in the role.

Sainsbury advanced after the UK supermarket posted a rise in fourth quarter sales.

ThyssenKrupp retreated following reports Germany's largest steelmaker is preparing to sell more than €1bn of shares to increase its capital.

Other asset classes edge lower

The euro/dollar declined by 0.57% to 1.2883.

Front month Brent crude futures dropped 1.304 dollars to the 108.100 dollar mark on the ICE.

RD

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