LONDON — Europe’s markets all slumped Monday morning after Greece’s banks closed for a week in the latest twist to the country’s debt crisis and its deadline for paying a 1.6 billion euro debt to the International Monetary Fund on Tuesday nears.
The FTSE MIB in Milan fell 3.2 percent to 23,043.19, while the CAC 40 in Paris was down 3.1 percent to 4,903.32 and the DAX in Frankfurt lost 3 percent to 11,146.54. The FTSE 100 in London declined 1.6 percent to 6,649.28.
At the opening bell, U.S. equities also fell sharply with the Dow Jones Industrial Average and the S&P 500 both losing 0.8 percent to 17,797 and 2,084, respectively, while the S&P Retailing Industry Group index fell 0.7 percent to 1,149. By midday trading, all three indices were sharply down. The Dow and S&P fell 1.2 percent to 17,730 and 2,076, respectively, while the retailing index lost 1.2 percent to 1,143.
On Friday, Greece’s Prime Minister Alexis Tsipras had called a referendum on the terms of the latest deal offered by its European creditors, which is set to take place July 5.
Diego Iscaro, IHS Global Insight senior economist, said in a research note this morning that the Greek government’s “decision to stop negotiating and call for a referendum has significant implications. Firstly, a default on the IMF is a now a near certainty. There is no way the creditors will offer better terms before Tuesday and Greece doesn’t have the resources to make the 1.6 billion [euro] repayment.”
The terrorist attacks on tourists on a Tunisian beach Friday also hit stocks on Monday, with travel firm TUI the biggest faller on London’s FTSE 100 Monday morning, down 6.1 percent to 10.46 pounds.
Fashion, luxury and retail stocks were almost universally in negative territory.
Those that fell the most included Koovs, 3.9 percent to 0.72 pounds; Inditex, 3.4 percent to 29.66 euros; Aeffe, 4.1 percent to 1.85 euros, and LVMH Moët Hennessy Louis Vuitton, 3.3 percent to 165.50 euros.
The few risers numbered Mulberry, 2.3 percent to 9.24 pounds; Gemfields, 0.8 percent to 0.60 pounds, and MySale Group, 1 percent to 0.51 pounds.
At 10:56 a.m. CET, the pound traded for $1.57, while the euro changed hands for $1.12.