European Markets Sold-Off Sharply Due To Crisis In Greece

(RTTNews) - The European markets ended Monday's session solidly in negative territory, but managed to finish off their lows, thanks to the modest dip in the U.S. equity markets. Financial stocks were the hardest hit after bailout negotiations between Greece and its creditors broke down over the weekend. The country faces a crucial 1.6 billion euro payment to the International Monetary Fund on June 30th. Without external aid, Greece is almost certain to default on that payment.

Greek Prime Minister Alexis Tsipras called a July 5th referendum on the country's bailout on Friday, taking its creditors by surprise.

The European Central Bank to decide not to raise the emergency funding it was providing the Greek banks following a conference call on Sunday. The current cap of the emergency liquidity assistance, a crucial life-line for cash-strapped Greek banks, is 89 billion euros.

Greece was forced to close its banks and imposed capital controls on Monday in order to avoid a financial collapse as the failure of debt talks with the EU makes it difficult to honor the payment due on June 30th.

The banks will remain closed until July 6th and a daily limit of 60 euros on cash withdrawals from ATMs is in place. The Greek stock market is set to remain closed this week as well as next, reports said.

Meanwhile, the Chinese central bank announced further reduction of interest rates, its fourth move in around seven months, in a bid to boost economic growth, according to a statement on Saturday. The bank cut one-year deposit rate by 25 basis points to 2 percent, while one-year benchmark lending rates were lowered by 25 basis points to 4.85 percent.

The Euro Stoxx 50 index of eurozone bluechip stocks decreased by 4.13 percent, while the Stoxx Europe 50 index, which includes some major U.K. companies, lost 2.65 percent.

The DAX of Germany dropped by 3.56 percent and the CAC 40 of France fell by 3.74 percent. The FTSE of the U.K. declined by 1.97 percent and the SMI of Switzerland finished lower by 1.54 percent.

In Frankfurt, Deutsche Boerse fell by 3.08 percent. The stock exchange operator announced that it is in negotiations with SIX Group AG regarding a full acquisition of the joint venture companies STOXX AG and Indexium AG for a purchase price of 650 million Swiss francs.

Volkswagen dropped by 3.37 percent, on a report the automaker plans to launch a family of low cost budget cars in China in 2018. Daimler finished down by 4.32 percent and BMW lost 4.09 percent.

Deutsche Bank sank by 5.86 percent and Commerbank surrendered 4.65 percent.

In Paris, Areva SA declined by 2.99 percent. The nuclear giant announced that it has commenced the process for the planned disposal of its subsidiary Canberra Industries, Inc., specialized in nuclear measurement systems and instrumentation.

Alcatel-Lucent finished down by 4.26 percent. Elliott Management disclosed that it has taken a 1.3 percent stake in the company.

Societe Generale decreased by 5.32 percent and Credit Agricole fell by 5.02 percent. BNP Paribas also weakened by 4.89 percent.

In London, travel stocks were under pressure following the terrorist attack in Tunisia on Friday. TUI sank by 7.10 percent and International Consolidated Air Group dropped by 4.14 percent. InterContinental Hotels Group fell by 3.44 percent and Thomas Cook Group weakened by percent.

Barclays dropped by 2.97 percent and Standard Chartered surrendered 2.84 percent. HSBC fell by 2.17 percent and Lloyds Banking Group lost 1.37 percent. Royal Bank of Scotland also finished down by 2.61 percent.

Ahead of Greece crisis escalating over the weekend, Eurozone economic confidence fell slightly in June on a mild deterioration of industrial and retailer sentiment. The economic confidence index fell unexpectedly to 103.5 in June from 103.8 in May, survey data from the European Commission showed Monday. It was forecast to remain unchanged at 103.8.

Germany's inflation slowed from a 7-month high in June, preliminary data from Destatis showed Monday. Consumer price inflation eased more-than-expected to 0.3 percent in June from 0.7 percent in May. Economists had forecast it to slow marginally to 0.5 percent. Nonetheless, this was the fifth consecutive rise in consumer prices.

British mortgage approvals declined unexpectedly in May, data from the Bank of England showed Monday. The number of mortgages approved for house purchases fell to 64,434 from 67,580 in April. It was forecast to rise to 68,900.

After reporting a sharp jump in U.S. pending home sales in the previous month, the National Association of Realtors released a report on Monday showing that pending home sales saw further upside in May. NAR said its pending home sales index climbed 0.9 percent to 112.6 in May from a slight downward revision of 111.6 in April. Economists had expected the index to rise by 0.6 percent.