Eurozone debt crisis: Markets dive on Greek referendum

US and European markets have fallen following Monday's announcement of a Greek referendum on the latest aid package to solve its debt crisis.

Eurozone leaders agreed a 50% debt write-off for Greece last week as well as strengthening Europe's bailout fund.
But the Greek move has cast doubt on whether the deal can go ahead.
New York's Dow Jones fell 2% on opening. London's FTSE 100 was down 2.5%, while the Dax in Frankfurt and the Cac 40 in Paris were down over 4%.
Shares in banks saw the biggest falls, with Societe Generale falling 16.0%, BNP Paribas down 11.9%, Credit Agricole down 10.8%, Commerzbank falling 10.0%, Deutsche Bank down 6.9% and Barclays 8.6% lower.
German Chancellor Angela Merkel and French President Nicolas Sarkozy issued a joint statement following a telephone conversation between the two leaders saying: "France and Germany are determined to ensure with their European partners the full implementation, as quickly as possible, of decisions taken by the summit, which today are more necessary than ever."
The two also said that eurozone leaders and the IMF would meet on Wednesday to hold talks over Greece.
Confidence vote Greek opposition parties have accused Prime Minister George Papandreou of acting dangerously, and called for an early election.

"Elections are a national necessity," conservative leader Antonis Samaras said, adding that Mr Papandreou was putting Greece's EU membership at risk.

A confidence vote is due to take place in the Greek parliament on Friday.
Mr Papandreou has 153 deputies in the 300-seat parliament, but has faced increasing dissent within his own party.
One of his MPs, Milena Apostolaki, resigned from the parliamentary group on Tuesday and six members of the party have called for Mr Papandreou to resign, according to the state news agency.
Opinion polls in Greece suggest that most people do not support the deal and there have been demonstrations against the austerity measures across the country, some of them violent.
Mr Papandreou told a meeting of his governing Socialist party on Monday that Greek people would have the final say on the austerity package, which is designed to reduce Greek debt by about 100bn euros through a series of measures including public sector pay cuts, tax rises and falling pensions.

The austerity measures are a condition of the bailout packages from the European Union and International Monetary Fund.

Some analysts are saying that the referendum would in effect be on whether Greece should abandon the euro.
Nobel Prize winning economist Christopher Pissarides said, "If there is a 'no' vote, Greece would immediately declare bankruptcy. I do not see how Greece could remain in the euro."
There is also concern that the referendum would be unlikely to take place before January, which would create months of uncertainty for the markets.
"We cannot wait until 15 January," said Konstantinos Michalos, president of the Athens Chamber of Commerce.
"Personally, I do not think we will ever get there."
A senior member of Chancellor Angela Merkel's coalition in Germany said he had been irritated by the referendum announcement.
"The prime minister had [agreed] to a rescue package that benefited his country," Rainer Bruederle told Deutschlandfunk radio.

"Other countries are making considerable sacrifices for decades of mismanagement and poor leadership in Greece."

He added that the only thing to do now would be to prepare for the Greek state to be insolvent and try to limit the damage to Europe's banking system.
On the currency markets, the euro fell 1% against the US dollar.
The yield on German bonds fell to near record lows, while the difference between the yield of German bonds and those of Italian and Belgian bonds rose to the highest since the introduction of the euro.
Earlier, the Nikkei in Tokyo closed down 1.7% and the Hang Seng in Hong Kong closed down 2.5%.
Europe's main share markets had all fallen before the referendum announcement as well, with the FTSE, Dax and Cac 40 all dropping by about 3% on Monday.