Cyprus Bank Panic Pushes Down Global Stocks

"The introduction of a levy on bank deposits - worth around €5.8 billion - seems to have broken another taboo. This goes beyond market and our expectations, raising concerns of a possible policy mistake," said Morgan Stanley strategists.

The Morgan Stanley strategists cited some upcoming issues for the euro zone - among them, Portugal's current official support is set to expire in one year's time, and Greece's official support plan might well need amendments.

"Depositors in these countries, who have already been put under severe stress, might draw parallels with the Cypriot situation," the strategists said. "It's quite possible to conceive at least some degree of contagion, in our view."