US stocks slip after Greeks reject terms of latest bailout package; European markets slide

Energy Associated Press

Stocks are falling in the U.S., but not dramatically, joining a wave of selling across the globe Monday after Greeks voted overwhelmingly to reject the terms of the country's latest bailout package.

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U.S. government bond prices rose as investors sought safe places to park money. Oil drillers and other energy companies fell sharply as the price of oil sank 4.7 percent.

The market declines were not as bad as many had feared, something analysts are crediting to the resignation of the Greek finance minister, which might help bailout talks resume.

In Sunday's referendum on creditor proposals, 61 percent of Greeks voted "no," a much higher proportion than anticipated. Many in the markets fear that the decision has pushed Greece one step closer to leaving the euro. Greece's banks may soon run out of money and the country could be forced to issue its own currency.

A so-called "Grexit" from the euro is considered to be one of the biggest risks facing the global economy.

"The prospects of Greece remaining in the eurozone have suffered a setback," said Bill O'Neill, head of the U.K. Investment Office at UBS Wealth Management. "A deal to keep Greece in the eurozone remains possible, but the odds against a successful conclusion have now lengthened."

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The Dow Jones industrial average fell 71 points, or 0.4 percent, to 17,660 as of 10:19 a.m. Eastern time. The Standard & Poor's 500 index gave up six points, or 0.3 percent, to 2,070. The Nasdaq composite fell 14 points, also 0.3 percent, to 4,994.

The U.S. market is coming off its sharpest weekly decline in three months.

In Europe, Germany's DAX fell 1.3 percent while the CAC-40 in France fell 1.9 percent. The FTSE 100 index of leading British shares was 0.7 percent lower.

There was little evidence Greece's troubles might affect other eurozone countries imminently. Government borrowing rates for Italy and Spain rose only marginally.

Oil prices took a big hit. The benchmark U.S. contract tumbled $2.75 to $54.21 a barrel in New York.

Bond prices rose. The yield on the 10-year Treasury note fell to 2.33 percent from 2.39 percent late Thursday. U.S. markets were close Friday for Independence Day.

The U.S. market is coming off its sharpest weekly decline in three months.

With Greek banks still shuttered and the European Central Bank under pressure to stop its emergency liquidity measures, Greece may not have long to secure a deal with creditors. A meeting of the eurozone's 19 leaders has been called for Tuesday.

Some hopes for progress in the talks grew Monday after Greek Finance Minister Yanis Varoufakis quit. His replacement, who has yet to be announced, may help unblock discussions with peers in the eurozone. Finance ministers also meet on Tuesday.

Over months of negotiations, Varoufakis' relations with his peers in the 19-country eurozone had deteriorated significantly.

"The fact that Varoufakis has resigned hints that the Greek government may at least be offering an olive branch given his reputation for using aggressive terms such as 'water-boarding' to describe the creditors' actions," said Jane Foley, a senior currency analyst at Rabobank International.

The euro fell 0.6 percent to $1.1043. The dollar slipped 0.1 percent to 122.77 Japanese yen.

Earlier in Asia, China's benchmark, the Shanghai Composite index, rebounded from last week's heavy losses after regulators and the securities industry intervened to prop up the markets, closing 2.4 percent higher.

Elsewhere, Japan's Nikkei 225 stock index dropped 2.1 percent, while Hong Kong's Hang Seng sank 3.2 percent. South Korea's Kospi fell 2.4 percent.

In the U.S., Aetna sank $5.84, or 5 percent, to $119.69 in early trading. The company agreed last week to buy rival health insurer Humana for $35 billion.

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Pylas reported from London.