European shares closed off their sessions lows on Monday, bouncing back from sharp falls in the first day of trade since a surprise bailout plan for Cyprus that includes a levy on savers was announced.
The FTSEurofirst 300 Index provisionally closed down 0.2 percent, as investors watched news in Cyprus closely ahead of a parliamentary vote on Tuesday afternoon. The Cypriot parliament is due to discuss the country's controversial bailout terms to ratify the European Union/International Monetary Fund proposal. Bank depositors could contribute up to 15 percent of their savings to help fund a 10 billion euros ($13 billion) bailout.
Under the original bailout terms, Cypriots with less than 100,000 euros in their accounts would pay a one-time tax of 6.75 percent. Those with deposits over that amount would pay 9.9 percent in tax.
Dow Jones reported on Monday however that Cyprus will put forward a new proposal which will see smaller depositors with savings up to 100,000 euros taxed at a lower rate than than those with greater holdings. Meanwhile Reuters said a government source in Cyprus suggested that deposits up to 20,000 euros could be exempt. Euro zone finance ministers will hold a teleconference at 18:30 GMT on Monday to discuss the bailout for Cyprus, euro zone officials told Reuters.
Earlier, equity markets fell sharply in Asia and the euro tumbled below $1.29 to its lowest level since December 10. Russia's MICEX Index, which opens before European bourses, was down 2.43 percent on Monday morning.
(Read More: Cyprus Bailout 'Disaster' Risks New Euro Crisis)
Banks in Cyprus were closed Monday for a public holiday and would remain closed on Tuesday and Wednesday, the agencies reported, as concerns grow over the danger of a bank run.
The decision by the euro zone to force bank depositors in Cyprus to contribute towards the bailout is without precedent in the euro zone debt crisis and could hurt other peripheral nations, analysts say.
Shares of U.K. retailer Marks & Spencer soared 7.95 percent after reports that a Qatari sovereign wealth fund were interested in the firm. Shares fell slightly to 4.34 percent after sources close to the fund told Reuters news agency that the Qatari fund was not interested in preparing a bid. Shares however pushed higher after the dip, and continued to lead the Euro Stoxx 600 Index.
Airbus announced it had signed a 18.4-billion-euro deal ($24 billion) deal Indonesian carrier Lion Air for 234 single-aisle passenger planes. The contract had been already reported by Reuters and shares in EADS showed little reaction to the news.