The FTSE-100 index closed down 14.38 points (0.02%) at 6378.38 today.
The US Treasury Department has welcomed the 'bail-in' agreement Cyprus has reached with international lenders, saying the financial stability in the eurozone was important to the United States.
The US Treasury said the agreement was "critical" and that they were monitoring developments closely.
It is critical to lay the foundation for a return to financial stability and growth in Cyprus. We will continue monitoring developments closely as details are finalized and the agreement is implemented.
Banks in Cyprus are due to reopen tomorrow however two of the biggest banks on the island, Popular Bank and Bank of Cyprus, will stay closed until Thursday, March 28, a Cyprus Central Bank source told Reuters.
The proposed bailout tax on bank accounts in Cyprus amounts to "legalised theft" according to Yury Pyanykh, president of the Association of Russian Businessmen in Cyprus.
Mr Pyanykh told Russia's state news agency RIA Novosti the measure will be successfully challenged in court:
“This is legalized theft. It contradicts fundamental international agreements. If they approve this measure, I can only imagine the number of lawsuits that will be filed and won.”
David Cameron has said the Cypriot banking crisis serves as a "reminder" to the UK that there is "no alternative" to the Coalition's current economic policy.
"While it is very difficult, there isn't an alternative to getting on top of our deficit, to getting our public spending under control, to making our economy more prone to growth," the Prime Minister said when asked about the Cyprus bailout during a visit to Ipswich.
Mr Cameron said the dire situation in Cyprus also proved "we are better off outside the euro", adding: "We can have our own economic policy, our own monetary policy and mend our fragile economy, which is badly in need of mending."
The PM, though, said he welcomed the financial aid given to the island nation and was "glad" those with bank savings under €100,000 would not face a levy, adding: "We are good friends of the people of Cyprus".
Cyprus president Nicos Anastasiades is on a flight back from Brussels now. He will return and (deliver a TV) address at 7:00pm local time (5:00pm GMT), during which he will lay out some more of the detail from the bailout deal.
He will try to calm the nerves of people in the country and stress that he did the best deal possible. Mr Anastasiades needs to restore confidence because people feel let down.
They feel their government was not properly prepared when it went into this in the first place. It now needs to do as much as it possibly can to safeguard people from the economic impact of everything that is going on.
People I've spoken to (in Nicosia) are extremely relieved that (the Cyprus bailout) deal has been done, but are fearful now for the future.
The head of the Cypriot finance committee said this morning he expected the economy to retract by around 10 per cent.
Though it is easy to think the small savers and normal people have been protected in this deal, the richest losing significant deposits is going to have a knock-on (effect) right the way down the money chain.
The people who are likely to suffer extremely badly are those on low-paid jobs, now waiting to see if there will be enough money in this economy to keep them paid and in work.
People are genuinely fearful that taking from the rich, as it is seen here, is also going to very seriously affect the poor.
The European Commission has established a task force to provide "technical assistance to the Cypriot authorities" in implementing the €10 billion rescue package, EU President Jose Manuel Barroso has announced.
The body will be based in Brussels, with a support team in Nicosia, he said in a statement, and its work will "have a strong focus on employment, competitiveness and growth".
President Barroso said the agreed package for Cyprus was "not only about financial stability. It is about restarting the economy."
Regarding the support shown for Cyprus, he added: "As we have shown in the past, Europe faces its challenges together. We do not leave Member States facing a financial crisis alone."