Stocks, euro staggered by Greece; China rescue in doubt

Asian stocks hit a six-month trough and the euro stumbled on Monday after a Greek vote against austerity measures endangered its future in the single currency and raised the risk of a full-blown crisis in the euro zone.

A rush from risk took MSCI's broadest index of Asia-Pacific shares outside Japan down 2.8 percent in the steepest daily drop in two years.

Japan's Nikkei shed 2.4 percent, while U.S. equity futures dropped 1.3 percent. Early signs were the major European bourses would open down at least 2 percent.

China's stock market tried to buck the trend following a salvo of rapid-fire support measures from Beijing over the weekend.

Yet after an early surge stocks soon flagged and the CSI300 index of the largest listed companies in Shanghai and Shenzhen was up just 0.5 percent. The Shanghai Composite Index was flat having been up over 7 percent at one stage.

While the price action was whippy across Asia, dealers emphasised that markets were orderly with few signs of financial strain and many assuming the European Central Bank would step in with a pledge of extra liquidity at some point.

The Japanese government said it was ready to respond as needed in markets and was in close touch with other nations.

"A lot depends now on what the ECB does with liquidity support for the Greek banks," said Antonin Jullier, head of equity trading strategy at Citi. "The ECB has the capacity to limit the spread of contagion."

The euro was down 0.8 percent at $1.1027 but above an early low of $1.0967. It lost more ground to the safe-haven yen, reaching 134.76 yen from Friday's 136.18.

The dollar faded modestly to 122.26 yen but its index was still up 0.3 percent at 96.394.

Demand for highly rated sovereign debt saw the U.S. 10-year Treasury yield fall 11 basis points to 2.28 percent.

Fed funds futures also rallied as investors wagered the endless uncertainty in Europe would make the Federal Reserve more wary of raising U.S. interest rates, or at least to tighten more gradually once it began.

In commodities, gold got a minor lift to $1,167.93 an ounce but Brent crude lost 75 cents to $59.57 a barrel.

The latest reports from Greece said around 61 percent of those voting in the referendum had backed the government and rejected the bailout conditions.

Following the outcome, calls mounted in Berlin to cut Athens loose from the currency union, raising the risk of a full-blown crisis in the euro zone.

German Chancellor Angela Merkel and French President Francois Hollande will meet in Paris on Monday afternoon as

the European Union's grand single currency project faces the biggest challenge since its inception.

Stunned European leaders called a summit for Tuesday to discuss their next move as investors fear "Grexit" could encourage anti-euro sentiment in other countries.

The ECB, which holds a conference call on Monday morning, is likely to maintain emergency funding for Greek banks at its current restricted level, sources said.

Though Greek government officials have vociferously denied any plans to issue a parallel currency, some investors suspect Athens could have no choice in the matter.