Euro falls as Greece votes ‘No’ to bailout package

Hopes on a deal for Greece is likely to support Asian shares throughout the session, though many investors still need to feel assured that the plunge in Chinese shares that shaved about 30 percent off the market since mid-June is really at an end.

TOKYO: MSCI’s broadest index of Asia-Pacific shares outside Japan extended early gains and was up 1.2 percent, but was still on track for a weekly loss over 4 percent in a period marred by a savage correction in Chinese stock markets. It was last down 2.7 percent.

The Dow Jones industrial average closed up 33.2 points, or 0.19 per cent, to 17,548.62.

“While it is looking likely that the ATMs in Greece may soon run dry, and the pressure will rise on the Tsipras government, the big meeting now appears to be a summit on Sunday (again) with all the 28 leaders of the euro area”, Emma Lawson, a senior currency strategist at National Australia Bank, said in a commentary.

“Shanghai’s early losses were like a cliff-dive, which had a huge impact on investor sentiment”.

“I’ve never seen this kind of slump before”.

“The Chinese market has shown a nice rebound for a day but it is important to note that numerous owners are restricted from selling their shares and half the companies have suspended trading“, said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin, Texas.

New applications for USA unemployment insurance benefits rose last week to their highest level since February, suggesting some slowdown in the labour market recovery.

Though the Greek debt crisis was on the back burner, it continued to smoulder.

Investors fear Greece’s financial woes, if it fails to reach a deal with its lenders, could spread to other southern European nations.

The first test looked to be whether the European Central Bank (ECB) would maintain emergency funding for Greek banks at the current restricted level.

The euro held steady on hopes that Greece’s debt crisis will be resolved in a few days.

The “No” vote triggered a rush to safety with the yen being the main beneficiary, with the euro down 1.6 percent against the yen to 134.24 yen, while the US dollar traded at 121.94 yen from 122.80 on Friday.

Riskier commodity currencies sank across the board, with the Australian dollar – often used as a China proxy – hitting a six-year low of $0.7372.

The Standard & Poor’s 500 index lost 17 points, or 0.9 percent, to 2,051.

Gold for August delivery, the most actively traded contract, gained $10.90 or 1.0 percent, to settle at $1,163.50 an ounce, on the Comex division of the New York Mercantile Exchange on Wednesday.