June 28, 2015 / 11:21 PM / 2 years ago

Euro, stock futures plunge on Greece default fears

2 Min Read

Pedestrians walk past electronic boards showing Japan's Nikkei average (top C L) and the exchange rates between the Japanese yen against the U.S. dollar (top C R) outside a brokerage in Tokyo, Japan, June 23, 2015.Yuya Shino

TOKYO (Reuters) - (This version of the story was refiled to correct grammar in first paragraph)

U.S. stock futures and the euro fell almost 2 percent in early Asian trade on Monday as Greece looks set to default on its debt repayment this week, forcing Athens to impose capital controls to halt bank runs.

The euro fell as much as 1.9 percent to $1.0955 EUR=, its lowest level in almost a month. Against the yen, the common currency dropped more than 3 percent to 133.80 yen, a five-week low.

U.S. stock futures dived 1.8 percent ESc1, hitting a three-month low, while U.S. Treasuries futures price TYv1 gained almost two points.

Asian shares look set to open lower, despite the Chinese central bank's monetary easing on Saturday, as investors are seen flocking to safer assets on the spectre of an unprecedented debt default by a euro zone country.

A cash-strapped Greece looks certain to miss its debt repayment on Tuesday as Greece's European partners shut the door on extending a credit lifeline after Greece's surprise move to hold a referendum on bailout terms.

Fear of an imminent default by Greece hit Greek banks, a major buyer of Greek government bills, triggering bank runs at weekend and forcing Prime Minister Alexis Tsipras to announce a bank holiday on Monday and capital controls.

Other European banks have limited exposure to Greece.

Any speculative selling in debts of such countries as Italy, Spain and Portugal, will likely be countered by the European Central Bank, which started buying euro zone sovereign debts from markets in March to shore up the economy.

Yet the perception could change if investors grow more worried about the future of the currency union, as whether Greece can stay within the euro zone after default will be called into a question.

"Financial markets will say 'it's all Greek to me'. Markets will reset their trend until last week and will start the week with risk aversion," Yasunobu Katsuki, senior analyst at Mizuho Securities.

Editing by Diane Craft

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