5:00 PM Frankfurt – European markets declined for the third day in a row as the latest read on manufacturing in the region was weaker than expected. The euro eased against the dollar after the European Central Bank set a firm deadline for the acceptance of bailout for Cyprus.
Market indexes across Europe were on the defensive after weaker than expected read on manufacturing in the currency zone and growing uncertainties related to Cyprus bank bailout.
Germany’s manufacturing industry index tracked by a purchasing managers’ survey showed an unexpected decline as reported by London based research group Markit.
European Central Bank set a firm deadline for Cyprus to agree to terms of bailout proposed by troika of international lenders.
The central bank said it will shut off its emergency lending operation for Cypriot banks on March 26 if the government fails to agree on bailout terms.
The central bank asked Cyprus government to consolidate its banking sector and impose the deeply unpopular one-time tax on its bank depositors.
President Nicos Anastasides of Cyprus is working with lawmakers to revise the terms of tax to 2% for amounts lower than 100,000 and impose 5% take on larger accounts. However, the fate of the measure is unknown in the Parliament and banks are closed at least till Monday next week.
In London trading, FTSE 100 index dropped 0.7% or 46.7 to 6,386 and in Frankfurt the DAX index declined 1% to 76.9 to 7,925.
In Paris, CAC 40 index slumped 1.6% or 62.1 to 3,767.
Spanish Treasury sold 4.52 billion euros of bonds of various maturities ranging from short to long terms and total demand for bonds added to 12.71 billion euros.
The treasury sold 1.156 billion euros of 2-year bonds with an average yield of 2.275% and sold 5-year bonds of 1.03 billion euros with yield of 3.557%. Yield on 10-year bonds of 2.325 billion euros of bonds increased to 4.919%.
Stocks in Review
Brenntag increased 4% to 118.25 euros after the chemical distributor reported full-year adjusted operating profit of 717 million euros, ahead of expectations.
E.ON AG increased 3% to 13.50 euros and other electricity makers also advanced after a political leader Hannelore Kraft called for 25% cut in electricity tax. Kraft is the popular rival to Chancellor Angela Merkel.
Lanxess AG plunged 6% to 58.15 euros after the chemical maker estimated operating earnings to drop as low as 160 million euros in the current quarter.
SAP AG declined 2.5% to 62.70 euros after its rival Oracle reported quarterly earnings and sales that were below estimates as customers shifted to cloud computing and purchased less than expected products.