NEW YORK (Reuters) - Stocks fell on Monday after a plan to tax bank accounts in Cyprus to help pay for the country's bailout stoked worries that it could threaten the stability of financial institutions in the euro zone. The move pushed the S&P 500 farther from its 2007 record closing high of 1,565.15 after the index came within striking distance of the level last week. Financial stocks led the day's decline, with the S&P 500 financial index (.SPSY) down 1 percent, following a steep slide in European bank shares. JPMorgan Chase (JPM.N) fell 1 percent to $49.51.
Cypriot ministers were trying to revise a plan to seize money from bank deposits before a parliamentary vote on Tuesday that will secure the island's financial rescue or could lead to its default. European officials have said the measure is a one-off for a country that accounts for just 0.2 percent of European output. The fear is that savers in larger European countries will become nervous and start withdrawing funds, although there was no immediate sign of that on Monday. "Will authorities be able to convince markets that this proposal is only for this unique situation, for such a small country where the banking system is more of a tax shelter? If they can't, that might cause new concerns about Europe's banking system."
The Dow Jones industrial average (.DJI) slipped 62.05 points, or 0.43 percent, to 14,452.06 at the close. The Standard & Poor's 500 Index (.SPX) shed 8.60 points, or 0.55 percent, to 1,552.10. The Nasdaq Composite Index (.IXIC) dropped 11.48 points, or 0.35 percent, to close at 3,237.59. Earlier in the day, the Dow had lost more than 100 points to tumble to an intraday low of 14,404.21. The Dow, which broke through its 2007 record highs on March 5, is still up about 10.3 percent for the year. [Reuters]