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U.S. and Canadian stock markets are poised to open with steep losses this morning after overseas markets were jolted by unsettling news that Cyprus is planning an unprecedented levy on bank savings.

Euro zone leaders struck a deal over the weekend to grant Cyprus a bailout worth 10-billion euros, but also imposed a levy that would see those with cash in the island's banks lose between 6.75 and 9.9 per cent of their money. Cyprus would be unable to avoid a default without the rescue, but the imposition of the levy could undermine confidence again in the euro zone.

There are now fears of contagion, whereby depositors in other European countries could yank out their own savings amid worries Germany or the European Union could impose similar measures against Spain or Italy.

Cyprus's parliament was due to vote on the measure today, but it has since delayed that to Tuesday to allow more time for negotiations.

The euro overnight weakened 1.5 per cent to its lowest level this year against the U.S. dollar, but has since trimmed some of those losses. The Canadian dollar is also lower this morning as traders cling to the perceived safety of the greenback. The loonie had been down about half a cent but has come off its lows as the North American trading day got underway. European bond yields widened, with Spain's 10-year government bond yield rising 11 basis points to 5.03 per cent.

Economically sensitive commodities are sharply lower, especially industrial metals, with copper down 2.5 per cent. Gold is benefiting from haven flows, but is only posting modest gains so far today.

U.S. stock futures suggest roughly a 1 per cent drop in the major indexes this morning, and the TSX shouldn't fare any better, given the sharp fall in commodity prices.

It will be a rude awakening for investors who had witnessed a climb in the Dow Jones industrial average in 10 of the past 11 trading days, bringing gains for the year to more than 10 per cent. A market pullback of some kind was widely expected sooner or later, and the Cyprus situation may be the catalyst to get it under way. Some suggest, however, that the European financial sector has better safety nets to protect against a new crisis in the banking system, and the selloff could be short-lived.

Asian markets had another worry overnight to contend with. Fresh data showed Chinese home prices rising 1.1 per cent in February, a rise of 2.2 per cent from a year ago, heightening concerns about a property bubble in the country. It was the seventh monthly increase in property values over the past eight months, and the run up in prices could force China's central bank to tighten monetary policy.

Now, here's a look at what else is going on in the markets.

MARKETS:

Equities:

U.S. futures: S&P 500 0.0 -0.9 per cent; Dow -0.6 per cent; Nasdaq -1.0 per cent

Hong Kong's Hang Seng index -2.00 per cent

Shanghai composite index -1.69 per cent

Japan's Nikkei -2.71 per cent

London's FTSE 100 -0.70 per cent

Germany's DAX -1.04 per cent

France's CAC 40 -1.20 per cent

Italy's FTSE MIB -2.10 per cent

Commodities:

WTI (Nymex May) -1.09 per cent at $92.78 (U.S.) a barrel

Gold (Comex Apr) +0.60 per cent at $1,602.40 (U.S.) an ounce

Copper (Comex May) -2.59 per cent at $3.43 (U.S.) a pound

Currencies:

Canadian dollar down 0.0014, or 0.15 per cent, at $0.9791 (U.S.)

ECONOMIC INDICATORS TO WATCH:

No market-moving reports scheduled.

STOCKS TO WATCH:

Earnings today include: Ivanhoe Energy Inc. and Lake Shore Gold Corp.

THIS MORNING'S TOP INVESTING READS ON THE WEB:

Natural gas could be the commodity market's 'sleeping giant.'

After amassing unprecedented wealth during 14 years of world-beating economic expansion, citizens of the so-called BRIC countries are losing their appetite for shares even as U.S. households return to stocks.

Several indicators suggest the latest market rally isn't over yet.

Are companies' present zeal to buy back their own shares a smart move given they could be buying at the market's highs?

An analysis of Apple's latest charts suggests it'll be nothing but a day-trading stock for some time to come.

HSBC thinks Asian stocks could still deliver a 20 per cent upside by the end of 2013.

Top bond fund managers are battening down the hatches ahead of a looming storm sparked by higher interest rates.

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The premarket report is constantly updated to reflect the latest news developments and market moves. For instant headlines on breaking economic and corporate news in the premarket, follow Darcy Keith on Twitter at @eyeonequities

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