6:30 PM Sydney – Markets in Australia and in Asia fell sharply on the worries that euro zone debt troubles are far from over. The latest proposal to impose a tax on bank depositors set off worries of a bank run in other troubled nations and knocked off commodities prices.
Investors in Australia reacted negatively after European regulators proposed to levy a stiff tax of as much as 10% on all depositors in Cyprus as a part of the bailout conditions.
The news sent indexes in Sydney and across all of Asia lower. Markets in Europe also opened sharply lower.
European regulators are demanding an approval from the Cyprus lawmakers that to win bailout the government must impose a 10% levy on all account with 100,000 euros and about 6% on accounts with less.
The proposal is still not final and needs an approval from lawmakers in Cyprus and banks are required to collect the funds before Tuesday when banks are scheduled to reopen after a 3-day weekend.
The proposal set off worries globally as Cyprus became the fifth nation to seek a bailout in the fast evolving euro zone debt crisis. Investors worried that similar measures may not be ruled out for Greece, Spain and Italy and that may kickoff a run on the banking system in the euro zone.
The ASX 200 index declined 104.80 or 2.1% to 5,015.40 and the broader All Ordinaries dropped 101.91 or 2% to 5,027.42.
Australian dollar traded near one-month high and closed at $1.029.
Miners and banks sold off on the euro zone uncertainties after regulators proposal to tax bank depositors that may initiate a bank run in the currency union.
Aurizon increased 0.5% to $4.06 and Queensland government cut its stake in the railroad operator by half to 8% and raised $800 million.
Rio Tinto slipped $1.75 to $59.55 and BHP dropped 86 cents to $34.69. Fortescue Metals Group decreased 16 cents to $3.90.
Woodside Petroleum slumped 72 cents to $36.45 and Santos fell 28 cents to $12.86.
Newcrest Mining gained 17 cents to $22.16. Kingsgate declined 17 cents to $3.95 and Whitehaven Coal slid 2 cents to $2.32.
David Jones Limited decreased 8 cents to $2.94 and Breville Group fell 7 cents to $5.32. Billabong slipped 1.5 cents to 82.5 cents and Globe International closed unchanged at 40 cents.
Woolworths dropped $1.30 to $34.75. Kathmandu increased 5 cents to $1.96.
Toll Holdings slipped 17 cents to $5.79, Leighton declined 53 cents to $21.61 and Mirvac Group slid 3 cents to $1.67. Lend Lease decreased 21 cents to $10.07.
Westpac dropped 92 cents to $29.97, Commonwealth fell 1.4% to $69.22 and National Australia Bank declined 2.6% to $30.49 and ANZ slipped 2.2% to $28.08.
Macquarie Group slid $1.10 to $37.25 and Wesfarmers slumped $1.02 to $42.10.