"No" supporters shout slogans during celebrations following a referendum in front of the parliament in Athens, Greece July 5, 2015. Greeks overwhelmingly rejected conditions of a rescue package from creditors on Sunday, throwing the future of the country's euro zone membership into further doubt and deepening a standoff with lenders. - REUTERS
SYDNEY/TOKYO: The euro and stock prices fell sharply in Asia on Monday after the Greeks had overwhelmingly rejected austerity measures demanded in return for bailout money, putting in doubt its continued place in the single currency.
U.S. equity futures dropped around 1.4 percent
Adding to the anxiety among investors, China's stock market face a make-or-break week after a 30 percent plunge in the last three weeks forced officials to roll out an unprecedented series of steps at the weekend to prevent a full-blown market crash.
While early price actions have been choppy, dealers emphasized that markets were orderly with no signs of financial strain and expectations were high that the European Central Bank would step in early with a pledge of extra liquidity.
The Japanese government said it was ready to respond as needed in markets and was in close touch with other nations.
The euro was down 0.8 percent at $1.1015
Likewise, the dollar recouped its early drop to be only a touch softer at 122.48 yen
The latest reports from Greece said around 60 percent of those voting in the referendum had backed the government and rejected the bailout conditions. [TOP/CEN]
Following the outcome, calls mounted in Berlin to cut Athens loose from the currency union, raising the risk of a full-blown crisis in the euro zone.
German Chancellor Angela Merkel and French President Francois Hollande will meet in Paris on Monday afternoon as
the European Union's grand single currency project faces the biggest challenge since its inception.
Stunned European leaders called a summit for Tuesday to discuss their next move as investors fear "Grexit" could encourage anti-euro sentiment in other countries.
"If the troika uses this vote to boot Greece from the euro the risk off trade will likely continue to widen spreads," said Steve Blitz, chief economist at stockbroker ITG.
"At risk going forward is the possibility of any number of nations seeking to divorce themselves from the euro in order to more easily, in their view, meet the ongoing rush of future obligations tied to pensions etc."
The ECB, which holds a conference call on Monday morning, is likely to maintain emergency funding for Greek banks at its current restricted level, sources said.
Though Greek government officials have vociferously denied any plans to issue a parallel currency, some investors suspect Athens could have no choice but to do so, effectively taking a first step towards an exit from the euro.
"A lot depends now on what the ECB does with liquidity support for the Greek banks," said Antonin Jullier, head of equity trading strategy at Citi.
"The ECB has the capacity to limit the spread of contagion ... but we might still see a fall of 3 percent on European markets on Monday."
Demand for highly rated sovereign debt saw the U.S. 10-year Treasury yield falling more than 10 basis points to 2.283 percent
Fed funds futures <0#FF:> also rallied as investors wagered the endless uncertainty in Europe would make the Federal Reserve more wary of raising U.S. interest rates, or at least to go more gradually once it began.
Oil prices took a spill with Brent crude falling 67 cents to $59.65 a barrel - Reuters
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