• Cypriots braced for harsh banking curbs

• Osborne pushes to protect UK branches of Laiki from deal

• Bank of Cyprus refuses to accept resignation of chairman

• G4S struggling with Cyprus workload as it guards banks

• 'We are facing an emergency': Cyprus finance minister

• Banks in Cyprus to stay closed until Thursday

Latest

22.30 That's where we leave our Live Blog for tonight. We'll be back tomorrow. Thanks for reading.

21.19 Cyprus Finance Minister Michael Sarris has said uninsured Laika depositors could face an 80pc haircut, and might have to wait up to seven years for a payout.

He adds: "If Parliament had voted on March 17 [instead of March 19], maybe we could have saved Laiki Bank... It's obvious that Germany wants to impose its will on the people of the South. They didn't want to show to German taxpayers that they would pay to save Russian depositors' money.

"France was silent. But France will have problems some time, and will need help from its partners too... We have a good relationship with Russia and we want to keep it that way.

"The EU showed us they didn't want us to leave the euro. They cancelled a summit with Japan, and sent an aircraft for us to travel to Brussels.

"It is one thing to say Greek PSI was bad for us but another to say Greece didn't help us or that it was Greece's fault. I am sure the people of Cyprus can the differences.

"Capital control measures to be finalised tomorrow."

20.56 Economist Paul Krugman hasn't pulled any punches. He believes Cyprus should quit the euro. Immediately.

The reason is straightforward: staying in the euro means an incredibly severe depression, which will last for many years while Cyprus tries to build a new export sector. Leaving the euro, and letting the new currency fall sharply, would greatly accelerate that rebuilding.

20.15 Jeroen Dijsselbloem: "There won't be a vote in Cyprus on the bailout, but its Parliament will need to vote on implementation measures... We've learnt a lot from the experience in Greece.

"If Cyprus left the eurozone, this wouldn't help much in the short term. It's banking sector would be wiped out. Bail-in not unique, it was applied in the case of four banks in Spain.

"I haven't seen much panic in financial markets in recent days."

20.03 Despite the gloom around Europe, in the US the Dow has closed at an all-time high of 14,553, up 105.5, or 0.7pc, on the day. The S&P 500 ended just two points away from its all-time high at 1,563, up 11, or 0.7pc. The Nasdaq closed at 3,250, up 15.4, or 0.4pc.

19.57 Jeroen Dijsselbloem can't confirm whether funds have been flown to Russia or whether measures have been effective. Adds that there won't be a danger for Greece to get in trouble again.

19.24 Meanwhile, in Greece, a dog has been removed from outside the finance ministry after "anti-austerity barking". No, really.

19.17 Eurogroup president Jeroen Dijsselbloem is at it again. He has now reportedly said that a levy on wealth is defendable in principle. He adds that the majority of Cyprus deposits aren't savings.

19.11 According to a Stern poll, 54pc of Germans are now concerned about their deposits, and only 41pc believe Angela Merkel's guarantee that their holdings are safe.

18.52 Spain's PM Mariano Rajoy says the bailout deal for Cyprus is extraordinary and unique. This has been echoed by France's Francois Hollande, who adds that deposits must be guaranteed.

18.45 Cyprus is making a "superhuman effort" to reopen the island's banks, according to the country's central bank governor. Panicos Demetriades said:

A superhuman effort is being made for the banks to open on Thursday [...] Once we fulfil our obligations, we will come out of this crisis stronger.

18.24 Wow. This from the deputy news editor of Greek daily Eleftherotypia:

<noframe>Twitter: Okeanos - RT <a href="http://www.twitter.com/ThrasyP" target="_blank">@ThrasyP</a>: <a href="http://search.twitter.com/search?q=Cyprus" target="_blank">#Cyprus</a> central bank gov Panicos Dimitriades says EU's suggestion during negotiations was ATMs daily limit of 30 euros</noframe>

17.58 The Bank of Cyprus has refused to accept the resignation of chairman Andreas Artemis and four board members (see 13.23).

In a statement, the Bank said that the resignations "would only apply if not withdrawn within one week".

This means the members - Vassilis Rologis, Costas Severis, Anna Diogenous, Takis Arapoglou and Mr Artemis - will be given time to reconsider their decisions.

17.52 More downgrades are on the way. Fitch has put Cyprus on "rating watch negative", following its downgrade of the country's main lenders this morning (see 09.50).

This means that there is a "heightened probability of a downgrade in the near term". Fitch currently rates the country at "B", or below investment grade. In a statement, the rating agency said:

The RWN reflects Fitch's opinion that the shock resulting from the systemic failure of Cyprus's banking system will have profound negative implications for the domestic economy, which heightens the risk to public finances. This is notwithstanding the fact the Cyprus has agreed an outline programme with its official creditors. This programme improves the sovereign's near-term position from both a liquidity perspective (official funding amounts to EUR10bn, or 55% of GDP) and a solvency perspective. The decision to bail-in depositors rather than government bondholders represents a significant upfront saving for the sovereign. It also underscores the de facto seniority of claims on the sovereign relative to other claims on the country and consequently acts as a support factor for sovereign creditworthiness.

17.32 G4S's bungled contract for the 2012 Olympics saw the company take a £70m hit. The fiasco also claimed the scalps of two senior directors.

17.29 When Cypriot banks re-open on Thursday (if they re-open on Thursday), who will be charged with the Olympic task of controlling the ensuing pandemonium? It's G4S, of course!

The British security firm says it has been working around the clock to replenish cash machines.

Speaking to Reuters, John Arghyrou, managing director of the Cyprus business for G4S, said:

Demand is greater than we can provide... We haven't closed since the crisis started. I've never seen anything like it in terms of what is going on from a security perspective. I would say the workload has quadrupled because the whole system has changed.

17.18 Our foreign correspondent Nick Squires has sent a picture from the streets of Nicosia, which he captioned 'Surreal times in Cyprus'.

Surreal times in Cyprus. The freezing of credit, closure of banks and deep uncertainty make for a strange, oddly quiet mood in the streets of Nicosia.

17.03 Mr Osborne also revealed that the government had flown a further €13m to Cyprus, in addition to the €1m sent across last Tuesday. to help military personnel on the island's two British bases. Answering questions from MPs on the Treasury Select Committee, he said:

We have flown €13m to Cyprus this weekend to help with our military presence there...and to provide if we need it a hardship fund.

16.33 We've heard reports that Cypriot President Nicos Anastasiades threatened to leave the euro at the height of tensions during the weeklong negotiations. But it seems he never meant it, if finance minister Michalis Sarris and he are on the same page. Speaking to reporters, Sarris said:

The exit of Cyprus from the eurozone, which could mean the exit from the EU, would be disastrous, politically and economically. We do not even want to contemplate it.

16.25 More from Cypriot central bank governor Panicos Demetriades who has echoed finance minister Michalis Sarris' estimation that large depositors will faces losses of around 40pc of savings over and above €100,000.

<noframe>Twitter: Bloomberg Athens - Cyprus Central Bank Governor Demetriades says losses for depositors at Bank of Cyprus with more than EU100,000 will be in the order of 40%</noframe>

16.05 Cypriot central bank governor Panicos Demetriades has cast some light on his intentions around capital controls, saying they will apply to all banks on the island - not just the two largest lenders at the centre of the bail-out.

He's also - somewhat cryptically - promised they will be "loose". As we mentioned earlier (15.24) it is not at all clear what sorts of limits will be placed on account holders in Cypriot banks when they open on Thursday.

Cyprus Central Bank Governor Panicos Demetriades makes statements outside the parliament in Nicosia on Friday. Credit: Reuters

We aim for some restrictions which, in the words of the president, will be loose.

16.01 There is anecdotal evidence that British ex-pats in the eurozone periphery are nervous about their deposits in Mediterranean banks. Financial advisory firm deVere Group say they've experienced a "surge" in inquiries on moving funds elsewhere. Nigel Green, chief executive, said:

Over the last week, since the messy deal to bailout Cypriot banks began, our financial advisers in these areas [Spain, Italy, Portugal and Greece] have reported a significant surge in enquiries from expats who are looking to safeguard their funds in other jurisdictions which are perceived to be safer.

Whether the institutions like it and accept it or not, there is a real risk of a major deposit flight from these countries as people feel their accounts could be plundered next.

15.57 Meanwhile the Cypriot government says it is "working intensively" to enable bank branches to reopen on Thursday, by which time they will have been closed for nearly two weeks.

Government spokesman Christos Stylianides said:

The day after the tough decisions that we had to take is, as expected, very difficult. We must manage the multiple problems that have arisen.

15.53 Cyprus' central bank governor Panicos Demetriades is giving a public address. Italian reporter Fabrizio Goria is listening in.

<noframe>Twitter: Fabrizio Goria - Huh RT <a href="http://www.twitter.com/cigolo" target="_blank">@cigolo</a>: Cyprus Central Bank Governor Says Deal Will Allow Bank Of Cyprus To Access Normal Funding, And Not ELA</noframe>

<noframe>Twitter: Fabrizio Goria - Cyprus Central Banker: Cyprus Would Default Today Without Bailout</noframe>

<noframe>Twitter: Fabrizio Goria - RT <a href="http://www.twitter.com/djfxtrader" target="_blank">@djfxtrader</a>: *Cyprus Central Banker: Bailout Deal is Only Hope for Cyprus to Recover</noframe>

<noframe>Twitter: Fabrizio Goria - Cyprus Central Bank --&#62; No Panicos RT <a href="http://www.twitter.com/Jeffrey_Black" target="_blank">@Jeffrey_Black</a>: ECB's *DEMETRIADES SAYS NO PLANS TO RESIGN</noframe>

<noframe>Twitter: Fabrizio Goria - Sure? RT <a href="http://www.twitter.com/Reuters" target="_blank">@Reuters</a>: Developing: Cyprus central bank governor says merger of bank of Cyprus with popular bank will produce "very strong bank"</noframe>

15.45 British ex-pats in Cyprus, however, have managed to avoid the worst of the consequences of the bail-out by moving chunks of their savings out of Cypriot banks well ahead of this week's events. Nick Squires reports:

While many Cypriots and their businesses face massive losses under the troika-imposed plan to restructure the island's two biggest banks, it appears that few British expats will be severely affected.

There are around 60,000 British citizens living in Cyprus, but most saw the writing on the wall long ago and reduced the size of their savings in Laiki Bank and the Bank of Cyprus.

Accounts holding 100,000 euros or less will be protected and not subjected to any levy.

"My feeling is that most British expats have already moved their money back to England," said Chris Drake, 70, a former BBC correspondent who has lived in Limassol for more than 20 years. "They realised they needed to get out of Bank of Cyprus and Laiki. The word got around very quickly that they were in big trouble."

He said Cyprus's financial sector had "taken a huge hit" and there would be dire knock-on effects for the rest of the island's economy.

15.42 More from our foreign correspondent Nick Squires on the devastating impact the bail-out will have on Cyprus' dominant financial services sector.

Cypriots fear that the island's lucrative financial services industry could be crippled by the consequences of the deal reached in Brussels in the early hours of Monday.

With Laiki, the country's second-largest bank, to be dissolved, thousands of employees are likely to lose their jobs.

There will be knock-on effects for the consultants, accountants and lawyers who make their living from the financial sector, which has attracted billions of dollars of foreign capital in recent years, including an estimated 20 billion euros from Russia alone.

The sector employs around 25 to 30 per cent of the workforce in Cyprus, which has a population of just 850,000.

“It has been hit very brutally,” Dr Stelios Platis, an economist at Cyprus International University of Management, told The Daily Telegraph.

He put the blame squarely on the Eurogroup, the gathering of the euro zone’s finance ministers, which granted Cyprus the bailout package.

“The Eurogroup killed the most important ingredient in any banking sector – depositors’ and investors’ confidence. Now we don’t even know if Cyprus’s largest bank (the Bank of Cyprus) will survive. The financial services sector was the largest and most successful economic activity on the island and it’s been hit by an unprecedented blow. The real economy will inevitably be hit as well.”

15.24 The BBC's Paul Mason has got his hands on the document that has been circulated to bank managers across the country to explain the capital controls which will be imposed when banks open on Thursday.

The only problem is that "every figure" in the document is as yet undecided, and reads '€xx'. Bank managers still do not know what the weekly withdrawal limit is, or what the upper limit for taking money out of the country.

15.10 More from Osborne, who told MPs discussions are underway to ensure the 13,000 or so depositors in the four UK branches of Laiki to be shielded from the wind-down of the bank under the Cyprus bail-out deal. Addressing MPs on the Treasury Select Committee, he said:

The Treasury is working with the Cypriot authorities on a British solution to the branch of the Cyprus Popular Bank (aka Laiki).

Discussions are taking place at the moment. I can't say a great deal more about them but we are engaged in negotiations to try to avoid the branches in the UK becoming sucked into the Cypriot resolution process.

14.56 Our foreign correspondent Nick Squires reports from Nicosia, where residents are still taking in the consequences of the desperate bail-out deal struck in the early hours of Monday morning.

The fact that Cypriot banks will remain closed until Thursday has caused more bewilderment, anxiety and anger for every one of Cyprus's 850,000 inhabitants, both locals and foreigners.

Mohammad Hussain, a Bangladeshi who has been studying and working in Nicosia, the Cypriot capital, since 2005, has had his finances thrown into chaos, like everyone else on the island.

He tried to use his Bank of Cyprus credit card to make some payments today but was unable to. "You can't do any internet banking. You can't do anything," said the 29-year-old business administration student.

Last week a Cypriot businessman offered him a job. "But this week he told me it's no longer a possibility," said Mr Hussain. "Now I have to start looking all over again."

14.52 Now it looks like the European Parliament says it will push for large depositors to be part of bail-in measures in banking crises, echoing earlier statements made by the European Commission (12.10).

<noframe>Twitter: Fabrizio Goria - RTRS: European Parliament To Push For Depositors With Above 100,000 Euros To Face Bail-in Under New Bank Resolution Law - Eu Lawmaker</noframe>

14.43 Chancellor George Osborne is fielding questions from MPs on the Treasury Select Committee. He criticised the handling of the situation and said the Treasury is working with Cypriot authorities to a British solution for UK branches of Laiki, which has one outlet in Birmingham and three in London. Laiki is to be wound down, with insured deposits (those under €100,000) being transferred to Bank of Cyprus and everything else to be folded into a bad bank.

Unfortunately for the Cypriot people, this is just the beginning. They are facing a sharp contraction on GDP, which I wouldn't wish on anyone.

He also said he did not think there were templates for eurozone bailouts, saying:

They [the eurozone] have had different solutions for different problems but its clearly the case if the eurozone hadn't moved more swiftly to deal with its problems. Unfortunately British people and many other countries have suffered a lot.

Mr Osborne also said he didn't question the legality of the capital controls, since Article 63 of Europe's internal market rules can be bent in an emergency.

Permanent Secretary to the Treasury Sir Nicholas Macpherson added that contingency plans have been made around potential economic outcomes in the eurozone.

Follow Szu Ping Chan's liveblog of Osborne's grilling here.

George Osborne has branded the 50p top rate of income tax 'very uncompetitive' Credit : PA

Credit: PA

14.10 Cypriot finance minister Michalis Sarris has described the "very, very tense" negoatiations in Brussels as his government were faced with "a real prospect of full catastrophe for Cyprus". Speaking to Bloomberg, he said:

Almost reaching any agreement would have been preferable to coming back empty-handed and risking the full collapse of the economy including the very real possibility of an exit from the eurozone.

He said he considered it a victory that one of the two largest banks was saved and repeated his assertion that he was against a bank levy on small deposit holders from the start, saying the IMF and Germany were the main drivers for such a measure. Accusations have flown back and forth over who pushed for the bank levies in the original proposals. A number of parties, including EU President Herman van Rompuy's adviser, have accused the Cypriot government for pushing the bank levy on small depositors.

A clip of the interview is below.

13.55 Greek finance minister Yannis Stournaras has weighed into the debate over whether the Cyprus bail-out deal represents a template for future crises. He has aligned himself with the European Central Bank by insisting the bail-out deal was tailor-made for the Mediterranean island. He said:

This solution concerns Cyprus only and no other country, because Cyprus has a particular banking system.

The eurozone is not insecure.

Greek Finance Minister Yannis Stournaras, right, arrives for an emergency eurogroup meeting in Brussels on Sunday, March 24, 2013. Credit: AP/Geert Vanden Wijngaert

13.23 Earlier we mentioned reports Andreas Artemis, chairman of the Bank of Cyprus, had tendered his resignation. One of the reasons he reportedly gave was that he had appointed an administrator without notifying the bank's management.

Now special administrator Dinos Christofides has confirmed he was appointed on Monday night, though he said the Cypriot central bank was responsible for his appointment. Speaking to Reuters, he said:

[I will oversee] the restructuring of the bank and the absorption of part of Cyprus Popular Bank.

It means that from now until further notice I will be running the bank. It could be short term...or it could be longer.

13.00 Sky's Ed Conway reports that the Bank of Cyprus haircut on large depositors will happen on Friday. Cypriot finance minister Michalis Sarris earlier (08.50) told Radio Four large depositors could see as much as 40pc wiped off their savings.

<noframe>Twitter: Ed Conway - Govt source: current expectation is Bank of Cyprus haircut to be implemented on Fri. So BoC may not reopen til then</noframe>

12.56 The European Central Bank's decision to keep funding flowing to Cyprus' ailing banks represents a stamp of approval for the bailout deal, according a senior official at the bank. Speaking to reporters, Jozef Makuch, governing council member and head of Slovakia's central bank, said:

The condition to relaunch ELA (Emergency Liquidity Assistance) for Cyprus was a programme which is trustworthy, and the fact that we decided to launch ELA means that this programme is trustworthy.

When it comes to ELA...no special conditions were established.

12.45 The orthodox Church of Cyprus, which offered up its entire wealth to help prop up the ailing economy, told the Cyprus Mail could lose more than €100m as a result of the bail-out, through losses from its extensive portfolio of investments across the island, including in the two banks at the centre of the deal.

The Cyprus Mail has the full story here.

12.36 More pictures from the student protests in Nicosia, were an estimated 3,000 young people have taken to the streets to express their fury at the bail-out deal.

Cypriot protesters hold a banner as hundreds of Cypriot students march on the presidential palace in Nicosia during a rally against a bailout for the financially crippled island on Tuesday. Credit: AFP/Getty Images

Cypriot students protest against the bailout package outside the Presidential Palace, in capital Nicosia, on Tuesday. Credit: AP/ /Petros Giannakouris

Cypriot college students light a flare outside the presidential palace during a protest in Nicosia against a bailout for the financially crippled island on Tuesday. Credit: AFP/Getty Images

12.18 On the back of the European Commission's Dijsselbloem-esque comments (12.10), The FTSE 100 is now trading flat on today's open and the DAX is down 0.12pc. Markets in the eurozone periphery have fallen more sharply, with the Spanish IBEX trading down 1.67pc and the Italian MIB down 1.18pc. The French CAC is proving more resistant, with shares having climbed 0.15pc.

12.10 Maybe the Cyprus bail-out is a template, after all. The European Commission has given the markets another shake by saying large depositors could be "bailed in" (i.e. their savings could be raided) for future bank rescues. Speaking at a press briefing, Commission spokeswoman Chantal Hughes said:

In the Commission's proposal, which is under discussion, it is not excluded that deposits over €100,000 could be instruments eligible for bail-in.

It is a possibility.

11.45 Confusing messages are coming from the European Commission, whose spokesman is being reported as saying that insured deposits (those under €100,000) cannot be raided to prop up failing banks, despite such an option being contained in the original proposal rejected by the Cypriot parliament last week.

<noframe>Twitter: Fabrizio Goria - RTRS: EU Commission says at no point is it possible to bail-in depositors below 100K, now or in future // LOL</noframe>

<noframe>Twitter: Matina Stevis - Ok, enough. If you insured depositors in EU are sacrosanct WHY DID YOU AGREE TO WHACK THEM LAST WEEK? [venting. sorry for caps]</noframe>

11.38 Meanwhile we've heard that the deal for Greece's Piraeus Bank to acquire the Greek branches of Bank of Cyprus and Laiki has completed. The takeover excludes these branches from the bail-out measures imposed on Cyprus' two largest banks.

<noframe>Twitter: Efthimia Efthimiou - Deal btwn Piraeus Bank and <a href="http://search.twitter.com/search?q=Cyprus" target="_blank">#Cyprus</a> banks is done RT <a href="http://www.twitter.com/capitalgr" target="_blank">@capitalgr</a>: Î&kappa;&lambda;&epsilon;&iota;&sigma;&epsilon; &sigma;&tau;&eta; &Lambda;&epsilon;&upsilon;&kappa;&omega;&sigma;Î¯&alpha; &eta; &sigma;&upsilon;&mu;&phi;&omega;&nu;Î¯&alpha; &tau;&eta;&sigmaf; &Pi;&epsilon;&iota;&rho;&alpha;&iota;Ï&sigmaf; &gamma;&iota;&alpha; &kappa;&upsilon;&pi;&rho;&iota;&alpha;&kappa;Î¬ &upsilon;&pi;&omicron;&kappa;&alpha;&tau;&alpha;&sigma;&tau;Î®&mu;&alpha;&tau;&alpha;</noframe>

11.30 More on Bank of Cyprus chairman Andreas Artemis' reported resignation. Local news website Stockwatch said he quit due to the condition in the bail-out agreement that the Bank of Cyprus would have to absorb Laiki's debts. He also cited the appointment of an administrator for the Bank of Cyprus without first informing the group's managment, and the sale of the bank's branches in Greece. Speaking to Reuters, an anonymous source said:

He sent a resignation letter this morning which will be examined by the board of directors convening this afternoon.

11.26 There has been no capital flight from the eurozone periphery following the Cyprus bail-out deal, according to Dutch finance minister and Eurogroup head Jeroen Dijsselbloem, who yesterday alarmed markets by hailing the Cyprus bail-out as a template for other struggling economies in the single currency. In a letter to the Dutch parliament, he said:

Currently there are no apparent signs of a higher-than-normal withdrawal of savings or of transfer of savings from peripheral to core countries.

11.12 A second European Central Bank heavyweight has chimed in to insist that Cyprus should in no way be seen as a template for other eurozone rescues, contrary to suggestions by Dutch finance minister and Eurogroup head Jeroen Dijsselbloem.

Earlier (08.58) we had the ECB's Benoit Coeure on on the issue. Now his ECB governing council peer, and Austian central bank head Ewald Nowotny, has joined a growing chorus. Speaking to reporters in Prague, he said:

Cyprus is a special case. It is no model for other instances.

Head of Austrian National Bank and ECB governing council member Ewald Nowotny. Credit: Reuters

10.30 German finance minister Wolfgang Schaeuble, who was reported as being "particularly irascible" during the last-ditch bail-out talks in Brussels overnight on Sunday, has said that Germany is a target of jealousy in the eurozone. Speaking to local broadcaster ZDF this morning, he said:

It always works out like that. This also happens in classrooms. Sometimes when you have better results, others have difficulties with this, sometimes they are even a little jealous.

Wolfgang Schaeuble, Germany's finance minister, centre, speaks with Pierre Moscovici, France's finance minister, far left, Christine Lagarde, managing director of the International Monetary Fund, second from left, and Maria Fekter, Austria's finance minister, ahead of the eurogroup meeting in Brussels, Belgium, on Sunday. He is reported to have become "particularly irascible" during the night's negotiations. Credit: Josh Fistick/Bloomberg

10.22 Greek journalist Efthimia Efthimiou is reporting that the president of the board of the Bank of Cyprus, Andreas Artemis, has resigned. The full report, in Greek, says his resignation is linked to the sale of the Greek branches of Bank of Cyprus to Greece's Piraeus bank .

The Bank of Cyprus is set to take on all Laiki Bank deposits under €100,000. However its large depositors face a severe haircut on their savings over and above €100,000, which the finance minister Michalis Sarris admitted this morning could be as high as 40pc.

<noframe>Twitter: Efthimia Efthimiou - President of Bank of <a href="http://search.twitter.com/search?q=Cyprus" target="_blank">#Cyprus</a> resigns RT <a href="http://www.twitter.com/capitalgr" target="_blank">@capitalgr</a>: &Pi;&alpha;&rho;&alpha;&iota;&tau;Î®&theta;&eta;&kappa;&epsilon; &omicron; &pi;&rho;Ï&OElig;&epsilon;&delta;&rho;&omicron;&sigmaf; &tau;&omicron;&upsilon; &Delta;.&Sigma;. &tau;&eta;&sigmaf; &Tau;&rho;Î¬&pi;&epsilon;&zeta;&alpha;&sigmaf; &Kappa;Ï&pi;&rho;&omicron;&upsilon; <a href="http://t.co/DHILXRNIx1" target="_blank">http://t.co/DHILXRNIx1</a></noframe>

10.10 Channel Four's Faisal Islam is tweeting pictures from a student protest in Nicosia where thousands of young people have taken to the streets shouting anti-Troika chants.

Students on the streets of Nicosia, courtesy of @fasalislam. Source: Twitter

<noframe>Twitter: Faisal Islam - Astonishing scenes in Nicosia. 1000s (all?) schoolchildren left classes burst on to streets to chant against Troika <a href="http://t.co/dLDTUgT45K" target="_blank">http://t.co/dLDTUgT45K</a></noframe>

<noframe>Twitter: Faisal Islam - In Argentina it was housewives with their pots &amp; pans coming on to streets, in Cyprus could it be teenage schoolkids with wrecked futures?</noframe>

<noframe>Twitter: Faisal Islam - "Exo i Troika tora" to the tune of white Stripes Seven Nation Army, is the chant of choice. means Troika Go Home Now <a href="http://t.co/EE9e8mddCa" target="_blank">http://t.co/EE9e8mddCa</a></noframe>

10.05 Earlier we reported on snippets of the drama from the fraught all-nighter in Brussels late Sunday/early Monday (09.10). The Wall Street Journal has been talking to insiders on negotiations, and paints an equally tense picture, with reports that German finance minister Wolfgang Schaeuble grew "particularly irascible".

Tensions were running high Sunday in Brussels as key officials—including IMF chief Christine Lagarde, ECB head Mario Draghi, EU President Herman Van Rompuy and other top EU officials—met Mr. Anastasiades over a lunch of lamb and baby potatoes.

Mr. Anastasiades complained that his country was being treated more harshly than any of the euro zone's other bailout victims. He backtracked on an earlier agreement to wind down Cyprus Popular Bank.

According to a senior Cypriot official, Mr. Anastasiades was appalled by the way he was spoken to at the lunch. The president threatened to resign. Mr. Dijsselbloem told him he didn't care about the president's political future, only the future of the euro zone, the senior official said.

The lunch ended two or three hours later "and not in a good mood," said a second official.

Germany's Finance Minister Wolfgang Schäuble grew particularly irascible, officials said. At one point, Ms. Lagarde went to calm him down. She also tried to raise spirits in Mr. Van Rompuy's fifth-floor suite, where top EU officials were meeting with Mr. Anastasiades. The IMF chief handed out M&Ms, as officials say she often does at late-night European negotiations.

Full report here.

09.50 Meanwhile Fitch has downgraded Cyprus' three largest banks - Bank of Cyprus, Laiki and Hellenic Bank.

Bank of Cyprus, which is to take on all Laiki Bank deposits under €100,000 but see its large depositors suffer a haircut as high as 40pc on their savings has been downgraded to 'restricted default' from B.

Laiki Bank, which is to be wound down, with its insured deposits going to Bank of Cyprus and anything else being hived off into a 'bad bank' has been set to default.

Hellenic Bank remains on negative watch.

09.30 Ratings agency Standard and Poor's has downgraded its eurozone growth forecast. It now predicts the 17-nation economy will shrink by 0.5pc, rather than 0.1pc.

<noframe>Twitter: Steve Collins - S&amp;P downgrades 2013 GDP f'cast to -0.5% from -0.1% : for EUROZONE</noframe>

09.10 Much of the drama that unfolded behind closed doors late on Sunday night will remain forever a mystery, but our foreign correspondent Nick Squires has gained some valuable insight, including the fact that, at the height of tensions, Cypriot president Nicos Anastasiades wanted to throw chairs around.

Cyprus's president was so infuriated by the demands placed on his country during emergency bail out talks in Brussels that he felt like throwing chairs around the room, it was reported on Tuesday.

Nicos Anastasiades told Cypriot MPs during a conference call that at one point he was so exasperated he wanted to pick up a chair and throw it.

At which point one of the politicians back in Nicosia taunted him: “Why don’t you throw an ashtray instead?” (apparently he is known for chucking ash trays around).

It was also confirmed that the president at one ponint threatened to resign during tense negotiations with international lenders in the early hours of Monday morning.

His outburst came during a heated exchange with the IMF that their proposal to saddle the Bank of Cyprus with €9 billion in emergency liquidity assistance owed by the Popular Bank to the European Central Bank, effectively signaled the lender’s closure in six months, according to a report in the Cyprus Mail today.

Anastasiades – known for his fiery temper – apparently lost it when Lagarde proposed a 60pc haircut on uninsured depositors with the Bank of Cyprus.

09.02 We'll be hearing more from Dutch finance minister and Eurogroup head Jeroen Dijsselbloem, who is set to debate the Cyprus bail-out in the Dutch parliament at 4pm GMT.

08.58 More from the ECB's Benoit Coeure, who in addition to emphasising the need for a single supervisor for eurozone banks, criticised Eurogroup head Jeroen Dijsselbloem for suggesting the Cyprus bail-out could be seen as a blueprint for other struggling eurozone lenders. His is the latest attempt to mitigate the fallout from Mr Dijsselbloem's comments, which yesterday wiped off market gains made in the wake of the bail-out deal. Speaking to Europe 1 radio, he said:

Mr Dijsselbloem was wrong to say what he said

The experience in Cyprus is not a model for the rest of the eurozone because the situation had reached a level that is not comparable with any other country.

08.50 Cypriot finance minister Michalis Sarris has described the situation in Cyprus as an "emergency" and "unprecedented. He said he hopes capital controls will only be in place for a few weeks. He also warned that large depositors could face losses as high as 40pc. Speaking to Radio Four's Today Programme, he said:

The exact percentage is not yet decided but it's going to be significant. People who have larger than €100,000 [in their savings accounts] have to exchange them for bank shares.

Asked if 40pc was a fair guess, he said:

It could be in that neighbouhood but what I have seen, such is the number.

He also expressed optimism that Russia would step in with more aid in addition to easing the terms of an existing €2.5bn loan.

I believe Russia will be looking at us with a greater desire to do more work with some economic cooperation that will be helpful to the recovery of the economy.

Mr Sarris also cautioned that the next few years will be painful for Cypriots.

I think it's fair to say we have taken a step backwards. As you know the Irish economy had similar problems and contracted by as much as 20pc. We now have to pick up the pieces but we have faced difficult situations before, and we now have the prospect of an energy boom.

There will be adjustment downwards of the standard of living and income, but Cypriots have shown entrepreneurship and ingenuity. We will overcome it in time.

Cypriot Finance Minister Michalis Sarris gestures during a press conference following a Eurozone meeting early on Monday morning at EU headquarters in Brussels. Photo: AFP/Getty Images

08.06 European markets have opened and seem to have shrugged off yesterday's jitters. The FTSE 100, predicted to open flat, has risen 0.21pc in early trading. Meanwhile the MIB in Milan and IBEX in Madrid, which were expected to tumble this morning, have climed 0.7pc and 0.39pc respectively.

08.00 Cypriot business analyst Professor Hari Tsoukas has warned that unemployment on the island could double, to reach 30pc, in the wake of the bail-out. Speaking to Sky's Tom Parmenter, he said:

Unemployment is likely to at least double from 14pc to at least 25pc and possibly up to 30pc. Not so long ago it was just 5pc.

It is a huge challenge now facing the Cypriot people, we have been resilient before and we will need all that again.

Sky has the full story here.

07.50 Senior ECB official Benoit Coeure has said the banking crisis in Cyprus highlights the need for a single supervisor of banks in Europe. Speaking to Europe 1 radio, Mr Coeure, a member of the ECB governing council, said:

The first lesson is that we need better control of banks. We need an independent European regulator, and that will be the case by mid-2014 and it will be the ECB, and we need to identify problems earlier in the eurozone.

07.35 Foreign correspondent Nick Squires is still in Nicosia, where he tells us that on the 11th day of bank lockdown businesses are finding it hard to buy stock and pay staff.

A man passes a sprayed entrance of a store that buys gold which reads in Greek " thieves" in capital Nicosia, Cyprus on Monday. Credit: AP

07.30 When banks finally re-open on Thursay after nearly two weeks, they will be subject to strict capital controls restricting the amount that can be transferred of withdrawn. Reuters Hugo Dixon has just been on Radio Four's Today Programme pointing out that it is unclear whether such measures will be imposed on all depositors, just those in the two largest lenders, or just those with deposits of more than €100,000.

Attention will now turn to the capital controls. Jeremy Warner on Friday argued that such measures effectively make the Cypriot euro into a national currency. as it will severely limit people from getting euros out of Cyprus and render them virtually worthless int he wider eurozone.

Guntram Wolff, deputy director of the Bruegel think tank, writing in the FT this morning, makes a similar point. He is sceptical of the Eurogroup's assurances that the measures will be temporary, proportionate and non-discriminatory.

I hope that “non-discriminatory” means that no distinction will be made between a transfer between two banks in Cyprus and a transfer between two banks in two different eurozone countries.

Ideally, “proportionate” means that the administrative measures will only be applied to banks that are troubled – not all of them.

“Temporary” should mean a period of a few days.

But the capital controls in Iceland, introduced in 2008, are still in place. They ought to serve as a reminder that even temporary capital controls can be hard to get rid of.

07.00 Overnight Asian shares followed those in Europe and the US to close down on jitters over Jeroen Dijsselbloem's suggestion that the Cyprus bailout could act as a blueprint for other struggling eurozone countries.

The Nikkei closed down 0.6pc, while the Hang Seng fell 0.28pc. The Shanghai Composite fell 1.25pc.

Futures markets predict European shares will drop this morning, with the worst losses predicted in stock markets in the eurozone periphery. While the FTSE 100 is expected to open flat, the Italian MIB and Spanish IBEX are predicted to fall 2.34pc and 2.4pc respectively. The German DAX and French CAC are expected to drop 0.48pc and 1.13pc respectively.

People at a cafe in Nicosia watch Cypriot President Nicos Anastasiades on television addressing the nation on Monday after he flew home from Brussels where he negotiated a bailout deal. Anastasiades acknowledged the terms of a eurozone bailout deal he struck in Brussels were "painful" but vowed the island would recover. Credit: AFP

06.00 Good morning. In the first day of "a new era for Cyprus", its banks will stay closed today and tomorrow, after the central bank reversed an announcement yesterday saying all but the two largest lenders would open their doors this morning.

The island is still reeling from an eleventh-hour deal struck by its president Nicos Anastasiades in the early hours of Monday morning following almost 12 hours of talks with Cyprus' EU and IMF lenders. Mr Anastasiades, addressing his public yesteray evening, described the agreement as "painful but the best we could get under the circumstances." He also verbally ushered in "a new era" for Cyprus and announced that there would be a criminal investigation into how Cyprus was led into crisis.

Although global markets were initially buoyed by news of the deal, gains were sharply wiped out when Dutch finance minister and Eurogroup head Jeroen Dijsselbloem announced that the heavy losses inflicted on depositors in Cyprus would be the template for future banking crises across Europe.

The Eurogroup swiftly backtracked, releasing a statement asserting that Cyprus is "a specific case with execptional challenges" and that programmes are "tailor-made to the country concerned and no models or templates are used." Nonethless markets across the board closed down. Bruno Waterfield has the full story here.

We also got confirmation yesterday that the European Central Bank will continue its emergency funding to Cyprus' banks. On Thursday the ECB told Cyprus it would stop the programme on Monday unless a satisfactory bailout deal was reached.

In case you missed it, here are the details of the new deal:

The country's second-largest bank, Laiki, will be dissolved immediately into a bad bank containing its uninsured deposits and toxic assets, with the guaranteed deposits - those under €100,000 - being transferred to the nation's biggest lender, Bank of Cyprus.

Although the deal avoided the controversial bank levy which saw the original proposal overwhelmingly rejected by the Cypriot parliament, even the best-protected senior bondholders investing in Laiki Bank would see their holdings "wiped out", said Mr Dijsselbloem.

Since the new deal does not involve a new tax, it does not need parliamentary approval.

While the Bank of Cyprus survives, it will suffer a major "haircut" - a forced wipeout of investment value - on all deposits of more than €100,000.

These forced losses on large deposit holders in the island's two largest banks are expected to raise €4.2bn of the €5.8bn that Cyprus is required to contribute to the bailout.