Asian markets mixed after Cyprus vote

Asian markets mixed after Cyprus vote

HONG KONG - Asian markets were mixed on Wednesday after Cypriot lawmakers comprehensively rejected a plan to tax savings as part of a crucial bailout deal, amid fears over the eurozone financial system.

The euro also slipped but avoided tumbling against the yen and dollar as European leaders sought to sooth investor concerns, saying they were willing to work with Nicosia to help it avoid bankruptcy.

Hong Kong rose 0.62 per cent, Shanghai climbed 0.90 per cent, while Sydney fell 0.73 per cent and Seoul lost 0.64 per cent.

Tokyo was closed for a public holiday.

On Tuesday MPs rejected a proposal to impose a levy on savings as part of a deal agreed with international creditors for a 10 billion euro (S$16.28 billion) rescue.

The plan had been to charge 6.75 per cent for deposits of 20,000-100,000 euros and a 9.9 per cent tax on anything above that. Savings of up to 20,000 euros would have been exempt.

Asian markets slumped on Tuesday after an initial deal was struck on Saturday that included a tax on all savers.

The 5.8 billion euros the levy proposal would have raised was crucial to Nicosia getting the full rescue. With that now in doubt Cyprus must now find other ways to raise cash to repay its debts.

However, while Tuesday's events raised fears the country could exit the eurozone, analysts said they soothed fears that such levies could be introduced in other troubled eurozone countries, which could have hammered confidence in the region.

And Dutch Finance Minister Jeroen Dijsselbloem said in a statement: "I confirm that the Eurogroup (of finance ministers) stands ready to assist Cyprus in its reform efforts" given Monday when it offered easier bank levy terms to reduce the impact on smaller savers.

The European Central Bank also said it would continue to provide financial support for troubled Cypriot banks, a key step to allow all sides a little more time to try to find a way out of the impasse.

But Stan Shamu, market strategist at IG Markets in Melbourne, offered a word of warning, saying: "The Cyprus issue is far from over.

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