European stocks fell and the euro weakened as Greek voters' rejection of austerity sent investors to the relative safety of Treasuries, German bunds and the yen. Shanghai stocks rose amid intensifying efforts to arrest a $3.2 trillion selloff.
The Stoxx Europe 600 Index slid 0.7 percent at 10:26 a.m. Monday in London and the euro declined 0.6 percent to $1.1052. The yield on 10-year German bunds decreased four basis points to 0.75 percent and the rate on Treasuries fell seven basis points to 2.32 percent, while Italian and Spanish yields increased.
Greece’s two-year note dropped 12 cents to 46.08 cents on the euro. Commodities slumped, with copper losing the most since January and Brent crude dropping below $60 a barrel. The Shanghai Composite Index rose 2.4 percent.
While investors sold riskier assets, the declines were muted compared with a week ago, amid speculation the resignation of Greek Finance Minister Yanis Varoufakis may aid talks with creditors. The European Central Bank is due to evaluate its next move later Monday as German Chancellor Angela Merkel and French President Francois Hollande hold talks in Paris before euro-area leaders meet on Tuesday.
"There is still hope that, with a new finance minister, talks could head in the right direction," said Daniel Lenz, lead market strategist at DZ Bank AG in Frankfurt. "Greek bonds are very much under pressure but for the rest of Europe it seems manageable.
"Everybody seems to be aware that Greece is an isolated case."
Volatility Falls
Banks led declines in the Stoxx 600 as more than 10 shares declined for every on that rose. Trading volumes were 31 percent greater than the 30-day average, according to data compiled by Bloomberg. Even amid the sell off, a measure of stock volatility fell from near a three-year high.
The euro weakened against 14 of its 16 major peers, paring earlier declines against the dollar and the yen. The yield on Spain’s 10-year bond rose 10 basis points to 2.31 percent and Italy’s climbed nine basis points to 2.34 percent.
Both yields jumped more than 20 basis points a week ago after Greek Prime Minister Alex Tsipras’s surprise call for Sunday’s referendum.
"The muted reaction implies the market is not too worried about a Grexit," said Jan von Gerich, chief strategist at Nordea Bank AB in Helsinki. "It is still early, and bigger moves may well surface in the near future, but I do not expect to see the start of another financial crisis. For now, the ECB can be happy that already the existence of support facilities seems to suffice."
Credit Risk
The Markit iTraxx Europe Index climbed four basis points to 79 basis points, according to data compiled by Bloomberg. A gauge of financial companies' credit-default swaps rose five basis points to 97 basis points, the highest since March 2014.
Rolls-Royce Holdings Plc slumped 8.7 percent after cutting its full-year profit forecast and halting a share-buyback program to preserve cash.
E-mini futures on the S&P 500 dropped after the index posted its biggest weekly decline since March, falling 1.2 percent last week.
The MSCI Emerging Markets Index lost 2.1 percent, the most in a week. Russia’s ruble and South Africa’s rand led currencies lower, falling at least 0.8 percent.
The Hang Seng China Enterprises Index declined for a third day sliding 3.2 percent. The Shanghai Composite Index gained even as two shares fell for every one that rose, amid government efforts to shore of a market that has tumbled 27 percent from its June 12 peak.
Over the weekend, China suspended initial public offerings, while brokerages pledged to buy shares and the central bank said it would provide liquidity for margin trading.
Commodities Slide
Copper for delivery in three months slid as much as 4.2 percent to the lowest price since Feb. 3. Nickel fell as much as 4 percent, while lead and aluminum were both close to entering bear markets.
Gold for immediate delivery slipped 0.4 percent to $1,164.28 an ounce in London trading. Platinum and palladium both dropped more than 1 percent.
Crude oil retreated, with Brent falling 1.1 percent to $59.68 a barrel in London trading, dropping below the $60-dollar mark for the first time since mid-April. In New York, West Texas Intermediate slid 3.2 percent to $55.12 a barrel, and touched the lowest since April 15.
Agricultural products also declined, with corn falling 1.6 percent to $4.22 a bushel on the Chicago Board of Trade. Wheat fell 1.6 percent and soybeans retreated 1.4 percent.
(Earlier versions of this story corrected the time stamp to London and the level of the euro’s 12-year low. )
--With assistance from Garfield Reynolds and Benjamin Purvis in Sydney, Eshe Nelson, Cecile Vannucci, John Deane and Neil Denslow in London, Marcus Bensasson, Matthew Campbell and Eleni Chrepa in Athens, Emma O’Brien in Wellington and Anna Kitanaka in Tokyo.
To contact the reporters on this story: Nick Gentle in Hong Kong at ngentle2@bloomberg.net; Stephen Kirkland in London at skirkland@bloomberg.net To contact the editors responsible for this story: Stephen Kirkland at skirkland@bloomberg.net; Stuart Wallace at swallace6@bloomberg.net James Hertling
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