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Cyprus: small country, bigger concern

Monday, March 18, 2013 - 02:05

Mar 18 -Summary of business headlines: Banks lead Wall Street reversal as Cyprus tax causes global financial concerns to resurface; Boeing declines as key customer doubts 787 return timing; homebuilder survey shows weakness in optimism. Conway G. Gittens reports.

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Europe rears its head again - this time by way of a controversial bailout for Cyprus - that was enough to prompt the first back-to-back loss for Wall Street in about a month. The Dow down 62 points. The S&P 500 lost 8 points and the Nasdaq shed 11 points. Hundred of Cypriots protested in front of their parliament building against plans to seize a portion of their bank accounts as part of a 10 billion euro, or $13 billion, bailout by the European Union. It's not the monetary figure that's causing global jitters, says S&P Capital IQ's global equity strategist Alec Young. SOUNDBITE: ALEC YOUNG, GLOBAL EQUITY STRATEGIST, S&P CAPITAL IQ (ENGLISH) SAYING: "It's more the principal of the EU being able to confiscate people's money out of their bank accounts in an EU member. Cyprus is the third smallest EU member but still an EU member and people worry- could that happen in Spain or Italy if they ask for a bailout." And that is the main concern - Cyprus is a reminder that the EU is still in a fragile state, which poses a risk to the global financial system. So, some of America's biggest financial institutions like Morgan Stanley, Citigroup, Goldman Sachs, JP Morgan Chase and Bank of America finished lower. Boeing was also lower. The aerospace giant lost out on a record $24 billion plane order by Lion Air. The Indonesian budget air carrier went with Boeing's arch-rival Airbus. Meanwhile, Boeing customer All Nippon Airways says it has no idea how long regulators will take to approve a new battery system for the downed 787 Dreamliner. Shares of Boeing -down about 1-1/2 percent. A survey from the National Association of Home Builders kicks off a busy week for the housing sector. Optimism dropped to a five-month low in March with building material costs on the rise, inventories on the decline and lending standards still tight. Back to Europe new, stocks headed lower ahead of a vote on that bank tax in Cyprus, a source says is slated for Tuesday.

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Cyprus: small country, bigger concern

Monday, March 18, 2013 - 02:05