By Carla Mozee, MarketWatch
Bond yields climb, euro falls against rivals
European stocks dropped Monday, with investors questioning
what's next for Greece and the eurozone after Greek voters
overwhelmingly rejected reform plans demanded by creditors to the
debt-laden country.
Most of the region's major indexes suffered losses of more than
1% at the close. The pullbacks came after more than 61% of Greeks
on Sunday voted "no" to austerity measures
(http://www.marketwatch.com/story/european-leaders-look-to-chart-path-following-greek-vote-2015-07-06)
and other overhauls that European and International Monetary Fund
officials had wanted in recent talks on further bailout aid.
Read: Latest news on Greek's debt crisis
(http://www.marketwatch.com/story/greek-debt-crisis-latest-news-2015-06-29).
The Stoxx Europe 600 fell 1.2% to close at 378.68, marking its
lowest close since February, according to FactSet data. Most
sectors were in the red, and bank stocks were the hardest hit in
the financials group. The Stoxx Europe 600 Banks Index was down
2.6%.
Germany's DAX 30 fell 1.5% to 10,890.63. Deutsche Post AG
(DPW.XE) was among the DAX's two sole advancers, up 2.3% after the
postal company and unionized workers, who have been on a round of
strikes, reached a wage agreement.
In Paris, the CAC 40 slid 2% to 4,711.54.
German Chancellor Angela Merkel and French President François
Hollande were expected to meet in Paris later Monday, and eurozone
leaders were slated to meet Tuesday in Brussels. Separately,
markets were waiting for any word from the European Central Bank on
what it will do with emergency lending to Greek banks. Read: Will
Greece now leave the euro? Watch the money to find out
(http://www.marketwatch.com/story/will-greece-now-leave-the-euro-watch-the-money-to-find-out-2015-07-05)
Meanwhile, Yanis Varoufakis on Monday resigned as Greece's
finance minister, with the official saying the move is related to
"creditors' loathing"
(http://www.marketwatch.com/story/varoufakis-resigns-as-greek-finance-minister-over-creditors-loathing-2015-07-06).
Economist Euclid Tsakalotos will be sworn in as new finance
ministers later on Monday.
Greek authorities have indicated they want to restart
negotiations with its creditors as soon as possible. "The efficacy
of these discussions will depend crucially on the negotiating line
taken after the referendum," said RBC Capital Markets's Elsa Lignos
and Timo del Carpio in a note. "We see a risk that the government
will overestimate its bargaining power on the back of the strong
'no' outcome."
For Germany's part, a spokesman for Merkel said the government
sees no reason to immediately restart bailout negotiations with
Greece
(http://www.marketwatch.com/story/germany-sees-no-reason-to-restart-greek-talks-2015-07-06),
but left the door open to more talks.
Spain's IBEX 35 lost 2.2% to 10,540.10, and Italy's FTSE MIB
stumbled 4% to 21,600.72. In London, the FTSE 100 lost 0.8%
(http://www.marketwatch.com/storyno-meta-for-guid) to 6,535.68.
In the currency market, the euro fell 0.4% against the dollar to
$1.1072, according to FactSet, but was off an intraday low at
$1.0952. Read more in Currencies
(http://www.marketwatch.com/story/euro-falls-against-rivals-as-greek-voters-reject-austerity-demands-2015-07-06).
At the same time, bond yields in Southern Europe
(http://www.marketwatch.com/story/bond-yields-climb-in-southern-europe-after-greece-rejects-bailout-terms-2015-07-06)
rose as prices fell, with the yield on 10-year Portuguese bonds up
21 basis points to 3.15%, according to electronic trading platform
Tradeweb.
U.S. stock
(http://www.marketwatch.com/story/us-stock-futures-slide-as-grexit-risks-rise-2015-07-06)
were also under pressure following the Greek referendum.
Among European corporate movers, Rolls-Royce Holdings PLC
(RR.LN) shares slid 6.3% after the engine maker suspended plans for
its first-ever share buyback
(http://www.marketwatch.com/story/rolls-royce-scraps-first-ever-share-buyback-2015-07-06).
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