Cyprus delayed by 24 hours a vote in parliament on a controversial plan to rescue the tiny island nation, and eurozone finance ministers were reported to be preparing emergency talks Monday to prevent the plan from backfiring.<\/p>\n
An unprecedented tax on bank deposits as part of the \u20ac10 billion rescue announced Saturday led to a run on cash machines in Cyprus. It also spooked investors, who feared that other weak eurozone states may be forced down the same path, despite EU statements to the contrary.<\/p>\n
Shares across the region fell in morning trading, and banks were hit particularly hard. The prices of government bonds across southern Europe also fell, pushing up yields. Early on Monday, however, there were no signs of bank runs in other European countries, including Italy and Spain.<\/p>\n
“The contagion from Cyprus is fairly limited but there is a tail risk that this measure could backfire,” wrote Berenberg Bank analysts in a note. <\/p>\n