FEARS over the precedent set by the deal to prevent Cyprus crashing out of the eurozone sparked fresh alarm among investors yesterday.

Global markets were spooked after a senior European official said the bank restructuring plan in Cyprus should be seen as a template for the rest of the eurozone.

The FTSE 100 closed 14.4 points lower at 6378.4, having been up by as much as 65 points amid earlier relief over the Cyprus rescue plan, which ensured the country will get the 10bn euros needed to shore up its banking system.

Banking stocks endured a volatile session as a result of the attention on Cyprus, with Barclays eventually three per cent or 9.9p lower at 282.1p and Royal Bank of Scotland down 6.1p at 287.2p. Lloyds Banking Group slipped 0.8p to 47.8p.

They were joined on the fallers’ board by a number of mining stocks, including Eurasian Natural Resources after a decline of 17.2p to 268.1p.

Vodafone was one of the session’s biggest risers amid further speculation over its potential exit from the US in one of the largest corporate transactions of all time.

The Sunday Times reported that the mobile phone company is leaning towards making a clean break from Verizon Wireless, in which it holds a 45 per cent stake. This could realise as much as $135bn (£88bn), although it is still far from certain that chief executive Vittorio Colao will press the button on a deal. Shares rose 3.75p to 187.2p, a gain of two per cent.

Schroders, which unveiled a deal worth £424m to buy smaller rival Cazenove Capital, was 3p lower at 2090p after initially rising by three per cent.

The tie-up of two of the City’s best known names will increase the value of Schroders’ assets under management by £17.2bn to £229.2bn.