Stocks slid, erasing early gains, amid concern that Cyprus's bank-restructuring plan will pave the way for losses on deposits in other European nations. The euro weakened against all 16 major peers while Italian and Spanish bonds erased gains.
The Standard & Poor's 500 Index retreated 0.3 percent to 1,551.82 at 4 p.m. in New York after climbing to as high as 1,564.91, within one point of its 2007 record close. The Stoxx Europe 600 Index lost 0.3 percent, reversing a 1 percent rally. Italy's 10-year bond yield rose 10 basis points to 4.61 percent, after decreasing eight points earlier, and Spain's yield jumped 10 points. Ten-year Treasury rates fell one point to 1.92 percent, while oil led commodities higher.
Stocks turned lower and the euro extended losses earlier amid concern the Cyprus deal will be used as a model in other euro-area nations that need to recapitalize financial institutions in the future. Cyprus agreed to the outlines of an aid deal that imposes losses which two European Union officials said would be as much as 40 percent on uninsured depositors at Bank of Cyprus Plc, which will take over the viable assets of Cyprus Popular Bank Pcl as that bank is wound down.