European Stocks Extend Losses as Cyprus Concerns Mount

European stocks eased in the opening minutes of trade, mirroring lacklustre Asian performance, as the Cyprus bailout concerns continued to dampen sentiments.

The FTSEurofirst 300 index, tracking the region's top shares, remained little changed at 1,190.7.

The UK's FTSE 100 and France's CAC-40 eased 0.1 percent while Spain's IBEX and Gemrany's DAX were down 0.2 percent. Italy's FTSE MIB fell 0.3 percent.

The single currency showed modest pickup against the dollar trading at about $1.29.

Concerns on Cyprus bailout plans are set to dominate market sentiments, as the country's leaders scramble to reach a solution to avert a fiscal crisis. The European Central Bank (ECB) has increased pressure on the island nation, warning that it will cut the emergency liquidity option unless a favourable decision is taken.

The weaker-than-expected euro area purchasing managers index released this week has further fuelled concerns. Preliminary PMI figures for Germany, France and the euro area remained lower in February, indicating the persistence of weak conditions across the region.

Investors are now awaiting the German Ifo data for further signs of economic health. Although it is known to contrast with PMI data, analysts have warned that there are chances that the business climate survey could disappoint this time.

Elsewhere, the Italian president Giorgio Napolitano is expected to come up with a mandate to form a government during the day, after the recent election results triggered a political deadlock. The decision comes after two days of talks among the leaders.

Asian markets had ended mixed earlier, as the renewed eurozone concerns and a disappointing Bank of Japan briefing dampened investor confidence.

The Nikkei average index slid 2.3 percent to end at 12338.5 while South Korea's KOSPI was down 0.1 percent to 1948.7. Australia's S&P/ASX 200 added 0.2 percent to 4967.3.

China's Shanghai Composite Index ended 0.2 percent higher to 2328.3. Hong Kong's Hang Seng fell 0.6 percent to 22103.5 towards close.

Bank of Japan's new governor Haruhiko Kuroda held his first press conference this week, where he promised to do all that is necessary to fight deflation. But his comments failed to cheer investors, who were expecting more aggressive announcements like advancing the open-ended asset purchase programme.

Exporter stocks eased in Tokyo as the yen rebounded from its weak levels after the central bank chief's disappointing press briefing. The greenback traded at about 94.64 yen after having topped the 96 mark this week.

"The Japanese currency could see more strengthening in the coming days as the country's fiscal year ends on 31 March and many Japanese will repatriate money back to Japan," said Jason Hughes, head of premium client management at IG Markets in Singapore.

Markets are now awaiting BoJ's policy meet, scheduled for early next month, to see what policy changes the pro-stimulus central bank head will bring.