By PAN PYLAS
LONDON (AP) â¿¿ Markets fell sharply Thursday as investors fretted over whether Cyprus will be able to agree on a package of emergency measures to avoid bankruptcy.
The country's lawmakers are in a race against time to fashion a deal that will also get the blessing of potential creditors from Europe and the International Monetary Fund. The European Central Bank has warned it will end emergency support for Cyprus' banks on Monday if no bailout deal is approved by then.
Cyprus needs to come up with 5.8 billion euros ($7.5 billion) on its own in order to secure 10 billion euros in rescue loans from international creditors. Without the money, it faces bankruptcy and a possible exit from the euro â¿¿ a chain of events that would hit financial markets hard as well as raising renewed questions over the future of Europe's single currency.
"No plan means the failure of Cypriot banks, since the ECB warned that it would cut emergency liquidity lines without one," said David Jones, chief market strategist at IG. "To add to the nightmare scene, queues of Cypriots are forming outside cash machines again. If fear continues to build, then it might not be long before similar lines are seen in Spain and Italy."
In Europe, the FTSE 100 index of leading British shares was down 0.7 percent at 6,387 while Germany's DAX fell 1 percent to 7,924. The CAC-40 in France was 1.6 percent lower at 3,770.
European markets weren't helped by disappointing economic figures for the 17 European Union countries that use the euro. The purchasing managers' index â¿¿ a gauge of business activity â¿¿ fell to 46.5 in March from 47.9 the previous month, indicating the eurozone economy is likely to remain in recession in the first quarter of 2013. A reading below 50 indicates contraction.