European stocks nosedive on Cyprus deal EUROPEAN stock markets have turned sharply lower after Cyprus agreed to a deal that qualifies the eurozone member for a bailout - but only after a radical downsizing of the island's financial sector. Bank shares had rallied early on Monday after the eurozone struck a deadline-day deal that keeps Cyprus from stumbling out of the single currency at least for now. But in afternoon trading shares radically turned direction, brought lower when Eurogroup head Jeroen Dijsselbloem told the Financial Times and Reuters the hard-won agreement to liquidate a major Cypriot lender could become a model for other troubled corners of the eurozone. "Taking away the risk from the financial sector and taking it on to the public shoulders is not the right approach," Dijsselbloem told the paper hours after the deal was reached. If we want to have a healthy, sound financial sector, the only way is to say, 'Look, there where you take on the risks, you must deal with them, and if you can't deal with them, then you shouldn't have taken them on ... The consequences may be that it's the end of story ..." he said. The blunt talk of leaving troubled banks to their fate sent shares into reverse with London's FTSE 100 index of leading companies ending the day down 0.22 per cent to 6,378.38 points after having traded higher most of the day. In Frankfurt, the DAX 30 slid 0.51 per cent to 7,870.90 points, while in Paris the CAC 40 nosedived 1.12 per cent to 3,727.98 points. Debt crisis flashpoint Madrid also turned to the red, down 2.50 per cent, and Milan slid 2.27 per cent. Contrary to what was said last week, Cyprus is no longer a special case which is causing anxiety. We've created a precedent (with the bailout deal)," said Andrea Tueni of Saxo Bank in Paris. The euro, after also rising early on, dipped to $US1.2854 from $US1.2986 in New York on Friday. Gold prices fell to $US1,599.25 an ounce from $US1,607.75 Friday on the London Bullion Market. German Finance Minister Wolfgang Schaeuble said the bailout deal sealed on Monday between eurozone nations and Cyprus is a fair one that will restore shaken faith in the debt-laden country and stabilise its economy. "The result is a fair one for everybody involved," Schaeuble told a news conference. It will "help win back lost confidence" and shore up Cyprus's finances, he said. Cyprus President Nicos Anastasiades battled for 12 hours overnight with his eurozone partners and the IMF to secure the deal. In the end, however, he let one banking chain go to the wall and left major investors in the island's biggest bank - many of whom are Russian - take a giant hit. Under the terms of the agreement, the island's second largest lender, Laiki (Popular Bank), will be wound up, an operation Dijsselbloem said would deliver a 4.2-billion-euro ($A5.25 billion) saving. As the impact of the deal sank in and Dijsselbloem comments hit the wires, European banks went deep into negative territory, with BNP Paribas ending the session down 3.04 per cent to 39.93 euros, Credit Agricole down 5.8 per cent to 6.18 euros and Deutsche Bank down 1.61 per cent to 31.88 euros. US stocks also fell in midday trade, with the Dow Jones Industrial Average 0.73 per cent lower, the broad-based S&P 500 down 0.48 per cent and the tech-rich Nasdaq Composite Index slumping 0.72 per cent.