London - European stocks retreated for a third day as policy makers wrangled over Cyprus’s 5.8 billion- euro ($7.5 billion) bank-deposit levy.
Rio Tinto Group sank to a three-month low after Goldman Sachs Group Inc. downgraded the shares.
ThyssenKrupp AG fell the most in almost four months after a report the German steelmaker is considering raising capital. Cie. Financiere Richemont SA slid the most in almost two months as an investor sold a stake in the world’s second-biggest maker of luxury goods.
The Stoxx Europe 600 Index slipped 0.3 percent to 295.89 at 2:35 p.m. in London.
The benchmark gauge sank as much as 1.2 percent yesterday, before rallying to close 0.2 percent lower, as euro-area policy makers pushed Cyprus into taking money from bank accounts to reduce the cost of its bailout package to 10 billion euros.
“Today’s market reaction may be more muted,” Michael O’Sullivan, head of portfolio strategy at Credit Suisse Private Banking in London, told Mark Barton on Bloomberg Television.
“We are beginning to get back to this deja vu where maybe our judgment is being clouded by the European Central Bank and Draghi’s pledge to save the euro.”
The Stoxx 600 has rallied 9 percent over the past year as ECB President Draghi promised to do whatever is necessary to preserve the single European currency.
The number of shares changing hands in companies on the index today was 5.6 percent lower than the average of the past 30 days, data compiled by Bloomberg show.
Cypriot lawmakers are due to meet at 6 p.m. local time to debate how to spread the proposed tax on bank deposits among account holders.
The levy, announced March 16, sparked outrage in the island nation and concern among investors about setting a precedent by breaking the taboo against raiding bank accounts. Banks and stock markets in Cyprus are closed today and tomorrow.
Parliament will probably reject the proposals, Cyprus President Nicos Anastasiades told Sweden’s TV4 channel in an interview today. The vote may be postponed, according to Defense Minister Fotis Fotiou.
Shares pared losses as the European Union said the proposed aid for Cyprus addresses a unique situation with “no parallels” anywhere else in the 27-nation bloc.
“We need to be very clear that the disproportionate size of the Cypriot bank sector in relation to the Cypriot economy and the nature of its liabilities make this an entirely unique situation,” Simon O’Connor, spokesman for EU Economic and Monetary Affairs Commissioner Olli Rehn, told reporters.
“EU law guarantees deposits up to 100,000 euros per customer per bank in the event of a bank failure. All member states are under the obligation to ensure that this protection applies.”
National benchmark indexes declined in 14 of the 18 western European markets.
The UK’s FTSE 100 dropped 0.1 percent, Germany’s DAX fell 0.6 percent and France’s CAC 40 sank 1 percent.
Greece’s ASE Index plunged 3.6 percent, with National Bank of Greece SA sliding 11 percent, as the market opened following yesterday’s national holiday.
German investor confidence rose to the highest level in almost three years in March.
The ZEW Center for European Economic Research said its index of investor and analyst expectations gained to 48.5 from 48.2 in February.
Economists in a Bloomberg survey had predicted 48.1.
In the US, housing starts increased to a 917,000 annual rate in February from a revised 910,000 the previous month, according to a Commerce Department release.
Economists in a Bloomberg survey had predicted a 915,000 pace. - Bloomberg News