Fears of a bank run in Cyprus and contagion across the wider Eurozone sparked a mass sell-off on European stock markets on Monday, as the Eurozone debt crisis rears its ugly head once again.
Analysts at UniCredit said in their morning note to clients that markets would be in a "risk-off mood" today after Cyprus' €10bn bailout deal with the Troika at the weekend, a decision intended to save the country from default and recapitalise its banking sector.
Nevertheless, British retailer Marks & Spencer (M&S) was a bright spark in early trading in London as M&A speculation escalated over the weekend.
Cypriot deal sparks bank-run worries
While the aid package for Cyprus had been trimmed from the initial €17.5bn amount (previous estimates), sentiment has been dampened by the plan for Greek depositors to share some of the burden to make up the difference.
Cyprus will impose a one-time tax of 9.9% on deposits above €100,000 and 6.5% on smaller deposits. Those amounts will be frozen on customer accounts in order to assure payment once banks re-open on Tuesday March 19th following a bank holiday.
The tax, which will allow Cyprus to raise around €6.0bn, has already resulted in a race to withdraw cash from banks and ATMs across the country.
"The decision to impose losses on depositors signals euro-area policymakers' willingness to risk triggering wider financial market disruptions in pursuit of other policy goals," said Bart Oosterveld and Alastair Wilson in an note for Moody's Investors Service.
"While raising the risk of deposit flight out of peripheral banking systems, the agreement reflects euro-area policymakers' desire to avoid sovereign defaults in addition to Greece's."
Qatar eyes takeover of High Street giant M&S
Takeover speculation at M&S stepped up a gear this weekend with Qatar's sovereign wealth fund thought to be mulling a bid for the High Street giant worth £8.0bn. According to The Sunday Times, the Qatar Investment Authority is said to be assembling a consortium of private-equity investors and has spoken to banks about financing a potential offer.
A potential offer is thought to value M&S's shares, which closed Friday's session at 372.5p, at a price of 500p each.
A slump in risk appetite following the Cypriot bailout deal hit banking and mining stocks today, with Barclays, RBS, Lloyds, Kazakhmys and ENRC among the worst performers early on.
Financial peer Legal & General was also lower after announcing that it has bought a 46.5% stake in British home builder CALA from Lloyds, marking the group's first direct investment of this kind.
Cruise operator Carnival sunk after Exane BNP Paribas cut its rating for the stock to 'neutral' and slashed its target price from 2,850p to 2,400p.
Home builder Berkeley Group edged higher after saying that it is confident that it will met expectations for the year ending April 30th and is on track to return 1,300p per share to shareholders by September 30th 2015.
John Laing Infrastructure Fund, a public private partnership infrastructure firm, also rose as it posted a solid increase in its annual portfolio value while lifting net asset value and its dividend payment.
FTSE 100 - Risers
Marks & Spencer Group (MKS) 390.30p +4.78%
Croda International (CRDA) 2,667.00p +1.25%
Sainsbury (J) (SBRY) 366.20p +0.94%
Next (NXT) 4,102.00p +0.29%
National Grid (NG.) 734.50p +0.07%
Vodafone Group (VOD) 183.35p +0.05%
FTSE 100 - Fallers
Sage Group (SGE) 330.00p -3.45%
Barclays (BARC) 309.00p -3.45%
Royal Bank of Scotland Group (RBS) 297.90p -3.25%
Kazakhmys (KAZ) 521.50p -3.16%
Schroders (SDR) 2,087.00p -3.11%
Carnival (CCL) 2,308.00p -2.98%
Eurasian Natural Resources Corp. (ENRC) 336.70p -2.91%
Lloyds Banking Group (LLOY) 49.18p -2.65%
Prudential (PRU) 1,125.00p -2.51%
Standard Chartered (STAN) 1,719.00p -2.50%
FTSE 250 - Risers
JD Sports Fashion (JD.) 785.00p +2.21%
F&C Commercial Property Trust Ltd. (FCPT) 102.50p +1.69%
UK Commercial Property Trust (UKCM) 67.75p +1.12%
Drax Group (DRX) 587.00p +1.12%
Kenmare Resources (KMR) 31.99p +0.98%
Rank Group (RNK) 170.50p +0.89%
IP Group (IPO) 137.10p +0.88%
TalkTalk Telecom Group (TALK) 259.40p +0.82%
British Assets Trust (BSET) 131.00p +0.77%
Raven Russia Ltd (RUS) 72.50p +0.69%
FTSE 250 - Fallers
Ocado Group (OCDO) 165.00p -9.98%
Petra Diamonds Ltd.(DI) (PDL) 122.70p -5.62%
Balfour Beatty (BBY) 267.10p -3.96%
Anite (AIE) 130.00p -3.06%
Playtech Ltd. (PTEC) 627.00p -3.02%
Perform Group (PER) 490.00p -2.78%
Synthomer (SYNT) 212.00p -2.75%
Rathbone Brothers (RAT) 1,491.00p -2.68%
Heritage Oil (HOIL) 187.90p -2.64%
Chemring Group (CHG) 249.30p -2.58%