Global markets retreated overnight amid ongoing concerns over Europe. The European Central Bank said it may cut Cypriot banks off from emergency funds after March 25 as the island nation's president, Nicos Anastasiades, struggled to forge agreement on a plan to stave off financial collapse.

European stocks dropped by the most in three weeks as a report showed German manufacturing unexpectedly contracted this month, while Cyprus's President worked on a new plan to obtain a bailout from the euro area.

In London the FTSE 100 shed 44 points (-0.7%) to settle at 6389, whilst the German DAX lost 69 points (-0.9%) to settle at 7932. In the U.S., sales of previously owned homes rose in February to the highest level in more than three years. Purchases increased 0.8 percent to a 4.98 million annualized rate, the most since November 2009, figures from the National Association of Realtors showed today in Washington.

Other data showed applications for jobless benefits increased by 2,000 to 336,000 in the week ended March 16, while the Conference Board's gauge of the outlook for the next three to six months climbed 0.5 percent for the second straight month.

The Dow Jones gave up 90 points (-0.6%) to settle at 14422, whilst the S&P 500 lost 13 points (-0.8%) to close at 1546.

Oil dropped as German manufacturing output unexpectedly contracted in March, signalling the euro-zone debt crisis is slowing growth in the region's biggest economy. Crude oil for May delivery declined $1.05 to settle at $92.45 a barrel on the New York Mercantile Exchange.

Gold climbed to a three-week high after reports in the U.S. and Europe revived concern that economic growth will slow, boosting demand for the precious metal as a haven asset. Gold futures for April delivery rose 0.4 percent to settle at $1,613.80 an ounce.

The euro traded at almost the lowest in four months versus the dollar as officials in Cyprus worked to produce a plan to secure financial aid and avoid the collapse of its banking system.

Today's sessions will bring us data in the form of the CB leading index, at 10:00am, AEST.

Morning Market Update: Cyprus Issues Weigh is a post from: Australian Stock Report Market Pulse Blog