Australia shares slump on Cyprus woes, biggest one-day drop in 4 weeks
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SYDNEY, March 18 (Reuters) - Australian shares dropped 2.1 percent on Monday, its largest one day drop in 4 weeks as investors were spooked by an unusual bailout proposal for Cyprus, sending copper prices sharply lower and triggering a broad selloff in cyclical stocks.
London copper slid to a four-month low earlier in the session as the Cyprus uncertainty threatened to reignite the euro zone debt crisis.
Global iron ore miners BHP Billiton Ltd lost 2.4 percent while rival Rio Tinto Ltd plumbed 2.9 percent.
Westpac Banking Corp led broad-based losses in the banking sector, slumping 3 percent, while National Australia Bank was down 2.6 percent.
The S&P/ASX 200 index ended the session 104.8 points lower to 5,015.4, the biggest one-day drop in four weeks. The benchmark added 1.8 percent on Friday, its largest one-day rise in eight months.
In a radical departure from previous rescue packages, euro zone finance ministers want to tap Cyprus' savers in order for the country to receive a 10 billion euro ($13 billion) bailout, triggering a run on cash after its announcement on Saturday morning.
The bailout plan rattled investors, sending regional stock markets and commodities down as investors fretted about the wider implications for debt-ridden eurozone members.
"It was not just the Cypress debt itself that upset markets today, but more so the connotations this situation may have when it comes to other more significant bailouts that may be required in the region," said Tim Waterer, senior trader at CMC Markets in Sydney.
"With a potential spanner thrown in the works of the Eurozone recovery, risk assets were on the retreat today with traders awaiting clarification of the longer term impact this may have," he said.
Receding concerns over Europe have been one of the key factors supporting stock markets in recent months. The Australian market has risen around 8 percent this year on a relatively strong earnings season, upbeat domestic data and an improving outlook for the global economy.
The downbeat mood also took its toll on the normally steadfast defensive sector. Food retailer Woolworths Ltd dropped 3.6 percent, while top telecommunications provider Telstra slipped 0.2 percent.
Bucking the market, gold miners were firmer as the price of bullion rose as nervous investors sought shelter in the yellow metal. Newcrest Mining Ltd rallied 0.7 percent while Regis Resources Ltd climbed 1.6 percent.
Gold rose above $1,600 for the first time in more than two weeks on the Cyprus bailout worries.
Beverage producer Coca Cola Amatil Group plumbed 2.9 percent to A$14.80 after the company announced its group managing director Terry Davis will step down on August 31, 2014.
New Zealand's benchmark NZX 50 index fell 1 percent or 46 points to 4,341.
(Reporting by Thuy Ong; Editing by Shri Navaratnam)
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