By Josie Cox
European stocks and the euro fell after Greeks rejected
creditors' demands in Sunday's referendum.
However, the losses weren't as steep as many investors and
analysts had expected. Some are still reluctant to make major bets
with so many questions still unanswered, strategists said.
The bloc's single currency fell as low as $1.0952 during Asian
trading hours Monday before recovering slightly to trade around
0.3% lower on the day at $1.108 early in Europe.
The pan-European Stoxx Europe 600 index fell 1.2%. Germany's DAX
declined 1.3%, France's CAC-40 was down 1.6%, Spain's IBEX lost
1.7% and Italy's FTSE MIB was off 2.6%. The Stoxx Europe 600 has
fallen more than 2.5% over the past month as Greek talks
intensified.
"This is a selloff but it's not as bad as it might have been,"
said Neil Mellor, a strategist at BNY Mellon.
"I think there is still a tentative feeling in the market that
we've been here before and there is still hope of a deal," he said,
adding that "we will only see the market moving in any one
direction strongly" once we get more clarity.
Eirini Tsekeridou, an analyst at Julius Baer, said that her base
scenario is still "that some form of compromise will be
reached."
Demetrios Efstathiou, a strategist at ICBC Standard Bank, said
that any selloff may also be limited by news that Greece's
confrontational Finance Minister Yanis Varoufakis is stepping
down.
"Without Varoufakis, negotiations will become somewhat easier,"
he said.
More than 61% of Greeks voted "no" in Sunday's referendum on
austerity measures and other overhauls that European and
International Monetary Fund officials had demanded in recent
talks.
While the outcome spurred popular celebrations into the night
across downtown Athens and other Greek cities, many strategists
said that this result pushes Greece further toward an exit from the
euro area.
Government bonds in Italy, Spain and Portugal--countries seen
most vulnerable to any Greek contagion--sold off slightly. Demand
increased for German government bonds, commonly considered safer
during times of stress.
In early trade, the yield on the 10-year German bond was at
0.74%, around 0.05 percentage point lower on the day. The yield on
10-year Italian bonds rose 0.05 percentage point to 2.31% and on
Spanish 10-year rose 0.05 percentage point to 2.27%. Yields rise as
bond prices fall.
Trading in Greek government bonds was halted last week on some
platforms. Greece's stock markets were closed last week and won't
reopen until Tuesday at the earliest, along with the country's
banks.
Brent crude was 0.9% lower on the day at $59.76 per barrel.
Gold, another asset commonly sought during times of volatility, was
0.3% higher at $1,166.60 per troy ounce.
Write to Josie Cox at josie.cox@wsj.com