* Cyprus delays vote on controversial tax on bank accounts
* VIX volatility index jumps but still low
* Dow flat, S&P 500 off 0.2 pct, Nasdaq flat
By Rodrigo Campos
NEW YORK, March 18 U.S. stocks recovered much of
their losses on Monday, set off by a plan to tax bank accounts
in Cyprus to help pay for the country's bailout. The plan
rekindled fears of an escalation in the euro zone crisis.
The Dow fell more than 100 points in the morning, with banks
the biggest decliners. European bank stocks were hit even
harder. An index of bank shares across Europe fell 1.5
The weekend announcement out of Cyprus came after the S&P
500 ended its 10th positive week in the last 11, and investors
on Wall Street took the chance to cash in some of the recent
gains. Including Monday's modest decline, the S&P 500 is on
track to post its best quarter in a year.
Cypriot ministers were trying to revise a plan to seize
money from bank deposits before a parliamentary vote on Tuesday
that will secure the island's financial rescue or could lead to
European officials have said the measure is a one-off for a
country that accounts for just 0.2 percent of European output.
The fear is that savers in larger European countries become
nervous and start withdrawing funds, although there was no
immediate sign of that on Monday.
"The issue ultimately for investors is: 'Is this going to
cause contagion?'," said Quincy Krosby, market strategist at
Prudential Financial in Newark, New Jersey.
She said European officials "have got to make clear this is
Cyprus specific and contain the risk."
On Wall Street, the KBW bank index and the S&P
financial sector index were each down 0.9 percent.
JPMorgan Chase fell 1.1 percent to $49.45 and ranked
as one of the Dow's biggest percentage decliners.
The Dow Jones industrial average rose 3.68 points or
0.03 percent, to 14,517.79, the S&P 500 lost 2.57 points
or 0.16 percent, to 1,558.13 and the Nasdaq Composite
dropped 1.26 points or 0.04 percent, to 3,247.81.
The Dow fell to an intraday low of 14,404.21 while The S&P
500 hit an intraday low of 1,545.13 and the Nasdaq slid as low
The Dow is still up about 10.6 percent for the year and the
S&P 500 is up about 9 percent so far in 2013.
"The market was slowing and getting a bit ahead of itself,"
Krosby said. "This is just part of that digestion and
consolidation. You don't see any panic in the U.S. market."
The CBOE Volatility Index, or VIX, Wall Street's
"fear gauge" rose 13 percent to a still low 12.77 level,
indicating a lack of a shift in sentiment toward the stock
market. U.S. Treasury debt prices rose, but yields were within
last week's range.
Schlumberger shares fell 3 percent to $77.01 after
the world's largest oilfield services company said fewer rigs
than predicted were going back to work in its North American
Shares of Dow component Boeing Co fell 1.4 percent to
$85.20 and dragged on the Dow. To get its 787 Dreamliner flying
again, Boeing is testing the plane's battery system to a
standard that the company itself helped develop - but that it
never used on the jet.
Boeing's European rival Airbus has signed an 18.4
billion-euro deal ($24 billion) with low-cost Indonesian carrier
Lion Air for 234 single-aisle passenger planes, poaching one of
Boeing's fastest-growing customers.
Shares of Charter Communications Inc rose as much
as 10 percent in high volume after the Wall Street Journal said
Liberty Media Corp is close to buying a 25 percent
stake in the cable operator for about $2.5
Charter shares were last up 7.6 percent at $96.97 and
Liberty fell 1.2 percent to $109.03.