LONDON, March 19 European shares fell for a
second day on Tuesday, with investors spooked by the possibility
that Cyprus could reject a bailout, likely leading to bank
collapses and unpredictable fallout for the rest of the euro
Cyprus parliament was widely expected to reject the 10
billion euro ($12.96 billion) rescue package - which, in a break
with previous EU practice, includes a levy on bank accounts - at
a vote on Tuesday.
With the Cyprus stock exchange closed, Greece was the worst
hit of the regional bourses, shedding 3.9 percent.
The pan-European FTSEurofirst 300 provisionally closed down
0.4 percent at 1,195.58 points after a volatile session.
The EuroSTOXX 50 index of euro zone blue chips - which tends
to be more sensitive to swings in sentiment on the region - fell
The VSTOXX implied volatility index - a crude barometer of
investor risk aversion - jumped, taking its gains so far this
week to 37 percent and marking its biggest two-day rise in 1-1/2
years, as investors sought out protection against or bet
on further market falls.
"VSTOXX had a significant jump so you can see that people
are aware of the risk, especially in the near term," said Ioan
Smith, strategist at Knight Capital.
"Personally I think it is pretty serious ... It's very
myopic to look at the size of Cyprus, this is more of a
procedural or operational impact across the board."