Markets drop after Greek No vote
Shares have tumbled after Greece's voters vehemently rejected conditions set by the country's international creditors, deepening doubts over its future in the 19-nation eurozone.
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% higher at 3,775.91.
Greece's debt problem has long overshadowed the markets and with a European summit expected on Tuesday, the implications of Sunday's "no" vote remain unclear.
The initial response to the Greek referendum was negative, but not panicked.
In early trading, the UK's FTSE 100 slipped 0.7 percent to 6,543.09, while Germany's DAX lost 1.2% to 10,926.13. France's CAC 40 lost 1.4% to 4,739.66.
"The referendum's result adds another layer of uncertainty to a very uncertain situation," said Diego Iscaro, a senior economist for IHS Global Insight.
"Negotiations will resume over the coming days, but the probability of a deal is distant."
Mr Iscaro said he expected the European Central Bank to continue providing liquidity to Greece's financial sector while the International Monetary Fund seeks a way out, possibly by promising debt relief in exchange for an agreement by Athens to set certain austerity targets.
Wall Street looks likely to have a rough start after the Independence Day weekend, with both Dow and S&P futures down 1%. The Dow fell 0.2% on Thursday to 17,730.11, while the Standard & Poor's index was little changed at 2,076.78.
Greek referendum results Sunday showed 61% of voters opted to reject demands for added austerity measures in exchange for further bailout funding, while 39% said "yes".
The scope for compromise in future negotiations on a financial rescue package for Greece remains unclear. However, the win of the "no" vote increases the risks it may drop out of the 19-country euro currency union if it must issue its own currency to alleviate a cash crunch.
A Greek exit from the eurozone would shake markets, but the scale of its economic impact overall would be limited by the relatively small size of the country's 242 billion dollar (£155 billion) economy - less than 2% of the 19-nation eurozone - and its population of 11 million.
Repercussions of the referendum nonetheless were felt across the globe. In Asia, Japan's Nikkei 225 stock index dropped 2.1% to 20,212.12, while Hong Kong's Hang Seng sank 3.4% to 25,190.18. South Korea's Kospi fell 2.4% to 2,053.93.
Mainland Chinese shares are somewhat isolated from world markets thanks to capital controls limiting the scope of foreign investment. The Shanghai Composite index surged nearly 6% after the market opened after the central bank pledged support for market investments; 28 companies agreed to postpone planned initial public offerings, and major brokerages pledged more than 19 billion dollars (£12 billion) for a fund to stabilise the free-falling markets.
The Chinese securities companies say they will continue to invest in the market as long the Shanghai Composite, China's equivalent of the Standard & Poor's 500 index, remains below 4,500. It closed at 3,686 on Friday.
The unexpectedly emphatic "no" from Greek voters will likely propel investors toward so-called "safe havens" such as US Treasuries or other government bonds that are viewed as largely protected from market turbulence.
"Markets have ignored consequences for the rest of the euro monetary union up until now, but the Greek 'no' vote probably changes this, which could now result in investors worrying about what happens to other weak peripheral countries," said William Longbrake of the University of Maryland's Robert H Smith School of Business.
Still, the European economy and European banks are in much stronger shape than they were when the debt crisis flared in 2010, said Paul Christopher, global market strategist for Wells Fargo in St. Louis, Missouri.
"We think the market reaction is likely to be sharp at first but then reverse higher in the coming weeks, as long as eurozone policymakers respond in a proactive way," he said.
Elsewhere in the Asia-Pacific, Australia's ASX S&P 200 fell 1.1% to 5,476.20 and New Zealand's benchmark also slipped 1.1% to 5,776.62. Shares also were lower in Taiwan and Southeast Asia.
Oil prices fell, with benchmark US crude tumbling 1.86 dollars to 55.07 dollars (£35) a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 3% to close at 56.93 dollars a barrel on Thursday.
Brent crude, a benchmark for international oils used by many US refineries, fell to £38 a barrel in London.