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US stocks slip after Greeks reject terms of bailout deal; European markets, oil drop sharply

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NEW YORK — Stocks in the U.S. fell broadly following drops in overseas markets as Greeks voted to reject creditor conditions for more loans, but the losses weren't as steep as many had feared.

With time running out for Greece to strike a new deal and its banks desperately short of cash, a wave of selling that started in Asia early Monday spread to Europe, then the U.S. By the end of the day, nine of the 10 industry groups in the Standard and Poor's 500 index were down. But the index itself had fallen a modest 0.4 percent.

Still, many investors were clearly nervous, putting money into assets considered safe bets in turbulent times such as U.S. government bonds. A rout in the stocks of oil drillers and other energy companies fed the selling as the price oil plunged nearly 8 percent.

In a Sunday referendum on creditor demands for spending cuts and tax hikes in exchange for more bailout money, 61 percent of Greeks voted "no," a much higher proportion than anticipated. Some analysts attributed the lack of sharper sell-off in stock markets to the resignation of the Greek finance minister, which might help bailout talks resume.

The Dow Jones industrial average fell 46.53 points, or 0.3 percent, to 17,683.58. The S&P 500 gave up 8.02 points, or 0.4 percent, to 2,068.76. The Nasdaq composite fell 17.27 points, or 0.3 percent, to 4,991.94.

In Europe, Germany's DAX fell 1.5 percent while the CAC-40 in France fell 2 percent. The FTSE 100 index of leading British shares was 0.8 percent lower.

Many in the markets fear that the Greek vote has pushed the country one step closer to leaving the euro.

Greek banks are running out of cash even after the government last week placed limits on how much depositors can withdraw. The European Central Bank has been providing emergency credit to the banks, but on Monday said it could not increase the amount offered because the banks' collateral was weaker now.

Meeting in Paris with her French counterpart, German Chancellor Angela Merkel stressed the importance of Greece taking "responsibility" for reforming its economy. Both she and French President Francois Hollande said the door was open to more negotiations. Eurozone leaders meet Tuesday to discuss the crisis.

Several reports from global banks and investment firms on Monday predicted the country will have no choice but to exit the euro and issue its own currency to relieve the cash crunch. A so-called "Grexit" from the euro is considered one of the biggest risks facing the global economy.

"The prospects of Greece remaining in the eurozone have suffered a setback," said Bill O'Neill, head of the U.K. Investment Office at UBS Wealth Management. "A deal to keep Greece in the eurozone remains possible, but the odds against a successful conclusion have now lengthened."

Russ Koesterich, chief strategist at giant money manager BlackRock, wrote in note to clients that he doesn't think the Greece crisis poses a "longer-term" threat to the global economy or financial markets.

Oil fell $4.40 to $52.53 a barrel on worries that a slowdown in Europe from the Greek crisis will cut demand for oil. Prices also reflected worries that Iranian crude held back by sanctions will soon hit the market as talks with the U.S. over Iran's nuclear program continue to progress.

Some hopes for progress in the talks with Greece grew Monday after Greek Finance Minister Yanis Varoufakis quit. Over months of negotiations, Varoufakis' relations with his peers in the eurozone had deteriorated significantly.

PHOTO: A television monitor carries news of the "No" vote on the Greek debt referendum as a trader works on the floor of the New York Stock Exchange, Monday, July 6, 2015, in New York. U.S. stocks are opening lower after Greeks voted overwhelmingly to reject the terms of the country's latest bailout. (AP Photo/Mark Lennihan)
A television monitor carries news of the "No" vote on the Greek debt referendum as a trader works on the floor of the New York Stock Exchange, Monday, July 6, 2015, in New York. U.S. stocks are opening lower after Greeks voted overwhelmingly to reject the terms of the country's latest bailout. (AP Photo/Mark Lennihan)

"The fact that Varoufakis has resigned hints that the Greek government may at least be offering an olive branch given his reputation for using aggressive terms such as 'water-boarding' to describe the creditors' actions," said Jane Foley, a senior currency analyst at Rabobank International.

The eurozone has taken steps after years of trouble with Greece to limit damage from a default and euro exit. Banks in Europe no longer hold much Greek government debt and the European Central Bank has pledged to pump liquidity into its financial system should fear spread through Europe.

Still, investors are on edge.

When the Greek government announced June 29 plans to hold a referendum and the closure of the country's banks, markets plunged around the world. In the U.S., the S&P 500 fell 2.1 percent, its biggest drop since the start of the year.

On Monday, investors braced for a repeat as Asian markets opened sharply lower. By the end of their trading days, Japan's Nikkei 225 and South Korea's Kospi each dropped more than 2 percent. Hong Kong's Hang Seng sank 3.2 percent.

China bucked the trend. The country's benchmark index, the Shanghai Composite climbed 2.4 percent after regulators and the securities industry intervened to prop up prices that had been falling in recent weeks.

Among U.S. stocks making big moves, Aetna sank $8.08 to $117.43, a 6.4 percent loss. That was the biggest slide in the S&P 500. The company agreed last week to buy rival health insurer Humana for $35 billion.

The euro fell 0.5 percent to $1.1057. The dollar slipped 0.3 percent to 122.54 Japanese yen.

Bond prices rose. The yield on the 10-year Treasury note fell to 2.29 percent from 2.39 percent late Thursday, a big move. U.S. markets were closed Friday for Independence Day.

Gold rose $9.70 to $1,173.20 an ounce, silver rose 19 cents to $15.73 an ounce and copper fell nine cents to $2.54 a pound.

Brent crude, a benchmark for international oils used by many U.S. refineries, fell $3.78 to close at $56.54 in London.

In other futures trading on the NYMEX:

— Wholesale gasoline fell 11 cents to close at $1.924 a gallon.

— Heating oil fell 13.1 cent to close at $1.709 a gallon.

— Natural gas fell 6.6 cents to close at $2.756 per 1,000 cubic feet.


AP Writer Pan Pylas contributed to this report from London.

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PHOTO: A trader works at the New York Stock Exchange, Monday, July 6, 2015, in New York. World markets are trending downward following Greece's "no" vote in Sunday's debt referendum. (AP Photo/Mark Lennihan)
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