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Markets steady as Cyprus banks reopen

Pan Pylas, AP Business Writer

LONDON (AP) -- Markets responded positively to the calm reopening of Cyprus's banks Thursday after a near two-week shutdown during which the country agreed on a bailout deal that will seize a chunk of many large deposits.

Though there were queues as the banks reopened, there was little trouble. Cyprus has imposed capital controls to prevent a run on the banks, the first time such measures have been taken since the euro was established in 1999.

"The lack of a run has soothed fears over rising tensions amongst eurozone governments following the bailout," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co. in New York.

In Europe, the FTSE 100 index of leading British shares was up 0.6 percent at 6,427 while Germany's DAX rose 0.4 percent to 7,817. The CAC-40 in France was 0.7 percent higher at 3,737.

The euro was also solid, trading 0.4 percent higher at $1.2829. It's been a volatile week for Europe's single currency following the Cypriot bailout agreement that was clinched in the early hours of Monday morning. Early relief gave way to concern that Cyprus' bailout deal might be a model for the future.

Uncertainty over the political future of Italy has also kept pressure on the euro this week. Following inconclusive elections around a month ago, the country is still without a government, and that's raised concerns over its future economic path. Italy is the third-largest economy of the 17 countries that use the euro.

In the U.S., the Dow Jones industrial average was up 0.2 percent at 14,547 while the broader S&P 500 index was flat at 1,563.

A raft of U.S. economic due data failed to provide markets with much direction. Though they showed the U.S. economy grew by an annualized rate of 0.4 percent in the fourth quarter of 0.4 percent, more than the 0.1 percent previously thought, weekly jobless claims unexpectedly rose by 16,000.

With Friday a public holiday in many parts of the world, including the major markets of the U.S. and Europe, trading volumes were fairly light.

Earlier in Asia, trading was affected by worries over policy tightening in China, the world's second-largest economy. The Shanghai composite index ended 2.8 percent lower at 2,340.50, with banking stocks leading the retreat.

That had a knock-on effect elsewhere in the region. Japan's Nikkei 225 index tumbled 1.3 percent to 12,335.96 while Hong Kong's Hang Seng lost 0.7 percent to 22,299.63.

Like equities, oil prices were steady, with the benchmark New York rate up 7 cents to $96.65 per barrel.