By Robb M. Stewart 
 

MELBOURNE, Australia--An escalation in the Greek debt crisis weighed heavily on Australian shares Monday, pulling the equities market to its lowest closing level since late January amid broad selling.

The S&P/ASX 200 closed down 2.2% at 5422.50, with key industry sectors in the red. It was the biggest one-day fall for the index this year after a 2.3% drop in May.

Uncertainty about Greece shook sentiment across the region after the country shut down its banking system, ordering lenders to stay closed for six days starting Monday. That followed a decision by the European Union not to expand a lifeline of emergency funds after Greek Prime Minister Alexis Tsipras said he would call a referendum on the economic terms that the country's creditors want for fresh aid.

Resources stocks sank as prices for a number of key commodities declined on concerns the Greek debt situation could dampen demand, while crude-oil benchmarks also were under pressure on continuing worries markets might remain oversupplied. Gold stocks were some of the few to post gains for the day as investors sought out perceived safe-havens.

Woodside Petroleum Ltd. (WPL.AU) lost 2.4%, Santos Ltd. (STO.AU) fell 1.4% and Origin Energy Ltd. (ORG.AU) declined 3.5%. Among the mining companies, BHP Billiton Ltd. (BHP.AU) dropped 2% and Rio Tinto Ltd. (RIO.AU) ended down 1.5%, while iron-ore producer Fortescue Metals Group Ltd. (FMG.AU) shed 3% after the price of the steelmaking commodity fell 1% on Friday to US$60.70 a metric ton.

Still, gold producer Newcrest Mining Ltd. (NCM.AU) rose 1.2%. Among smaller gold mining companies, OceanaGold Corp. (OGC.AU) advanced 6.7%, Alacer Gold Corp. (AQG.AU) climbed 4.9% and Evolution Mining Ltd. (EVN.AU) gained 3.9%.

Australia's four-largest banks were all sold heavily, with Australia & New Zealand Banking Ltd. (ANZ.AU) down 3.1% and Westpac Banking Corp. (WBC.AU) 3% weaker. National Australia Bank Ltd. (NAB.AU) and Commonwealth Bank of Australia (CBA.AU)were 2.6% and 2.3% lower, respectively. Investment bank Macquarie Group Ltd. (MQG.AU) lost 2.4%.

Shares in Slater & Gordon Ltd. (SGH.AU) slumped 25% after the law firm said errors had been uncovered in the reporting of historical cashflow by its U.K. business. It also faced questioning by the Australian Securities and Investments Commission as the regulator reviews Pitcher Partner's audit process of the company.

Write to Robb M. Stewart at robb.stewart@wsj.com

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