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".
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."
The levy on deposits in Cypriot banks by savers with more than €100,000 is likely to be "under or around 30 per cent", a spokesman for the Cypriot government has said.
Christos Stylianides was questioned over the level of losses on uninsured depositors during an interview with state radio.
President Vladimir Putin has told his government to negotiate the restructuring of a Russian bailout loan to Cyprus, his spokesman has said.
The announcement signals Moscow's support for a €10 billion bailout, despite concern that Russian depositors in Cyprus could take losses as a result.
Cyprus had requested an extension of an existing €2.5 billion Russian loan, and a reduction in the interest it charges to 2.5 per cent from 4.5 per cent. Talks last week failed to agree on a restructuring.