Greece’s Debt Crisis Sends Stocks Falling Around Globe

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from The New York Times,

Global markets shuddered on Monday after Greece closed its banks amid fears that the country was headed toward default.

Stocks slumped modestly on Wall Street, after markets in Europe were buffeted by worries that the Greek debt crisis would prove contagious and Chinese investors endured another topsy-turvy session.

By early afternoon in New York, the Dow Jones industrial average was down 1.1 percent, the Standard & Poor’s 500 was down 1.4 percent, and the Nasdaq average had fallen 1.2 percent.

The Euro Stoxx 50 index, comprising the eurozone’s big blue chip companies, closed 4.2 percent lower, after being down about 5 percent at the opening. The FTSE 100 index in London fell 2 percent.

In Greece, banks and markets will be closed for the week, after Prime Minister Alexis Tsipras interrupted last-ditch debt negotiations early Saturday with the announcement that he was calling a referendum for July 5 on whether to accept the tough terms offered by international creditors.

Investors have been concerned by the probability that Athens will be unable to meet a 1.6 billion euro, or roughly $1.8 billion, loan repayment to the International Monetary Fund that is due on Tuesday, with uncertain consequences for Greece’s future in the eurozone and even in the European Union.

If Greece fails to make payment, Mr. Weinberg said, the country could be declared either in arrears or in default, with such a determination taking several days. If Greece is declared in default, “a clock starts for creditors to deal with it, and just the existence of that uncertainty will be a cloud over the market, because we won’t know for a while,” he said.

“And when the big money starts to reposition itself, that’s when we’ll see the big moves,” he added.

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