Reuters: US Dollar Report: GLOBAL MARKETS-Euro weak, Bunds up as Cyprus prepares to reopen banks

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GLOBAL MARKETS-Euro weak, Bunds up as Cyprus prepares to reopen banks Mar 28th 2013, 08:42 Thu Mar 28, 2013 4:42am EDT * Euro hovers near 4-month low vs dollar with eyes on Cyprus * European shares inch up but remain near 3-week low * Assets generally lacklustre ahead of Easter holiday weekend By Marc Jones LONDON, March 28 (Reuters) - The euro hovered near a four-month low and safe-haven German government bonds rose on Thursday, as fears of a potential run on Cyprus's banks when they reopen later stoked investors' concerns. Cypriots are expected to descend in their thousands when the island's battered banks reopen at around 1000 GMT, though there will be tight controls on withdrawals or transfers to prevent depositors from cleaning out their vaults. The Mediterranean island fears a stampede at banks almost two weeks after they were shut by the government as it negotiated a 10 billion euro ($13 billion) bailout package with the European Union to escape financial meltdown. The rescue deal is the first in Europe's single currency zone to impose losses on bank depositors, raising the prospect that savers will panic and scramble to get at their cash. The uncertainty left the euro languishing near a four-month low, as the last trading day of the quarter and ongoing political uncertainty in Italy added to the cautious mood. "It is likely to be another difficult day," said Daiwa economist Tobias Blattner. "Despite all the rowing back from policymakers, everybody now understands that the lesson from the Cypriot bailout is that PSI (private sector involvement) in whatever form will be a cornerstone of any future bailout." At 0815 GMT the euro was at $1.2794 to the dollar, having briefly clawed back above $1.28 in Asian trading. European stock markets were also subdued. The FTSEurofirst 300 index of top shares inched up 0.2 percent as the previous session's sharp falls tempted back buyers, but it remained on course for its second successive week of losses. While it comes too early to reveal the full extent of any flight from Cyprus, data from the European Central Bank due at 0900 GMT will show what happened to deposits in February when the possibility of a grab on savings was first emerged. German government bonds, an asset that investors turn to in times of increased tension, rose in early deals, with bund futures up 10 ticks near a three-week high. In Asian trading, Japan's Nikkei stock average and other indexes in the region had also closed lower in their final session of the quarter. Link this Share this Digg this Email Reprints

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