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Billions wiped off sharemarket

More than $35 billion has been wiped off the Australian share market as investors brace for an increasingly likely Greek exit from the euro zone.

Both the S&P/ASX 200 and All Ordinaries were down about two per cent within the first hour of trade, with IG market strategist Evan Lucas saying the market was on track for its worst day in several years.

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“Unfortunately this could probably be our worst day in two or three years, you’d probably be going back to 2011 or 2012,” he said.

“It’s a very tough time and unfortunately nothing will be spared, except perhaps gold.”

The slide was spread across the market, with banks, miners, retailers, healthcare providers and telcos all down sharply.

Gold stocks nudged ahead as investors sought out safe-haven investments.

Meanwhile, the Australian dollar has fallen around three quarters of a US cent since Friday and is currently trading at around 76.3 US cents.

Australia is one of the first stock markets to react to the breakdown in talks between Greece and euro zone and IMF creditors on the weekend and the sell off is is likely to be replicated across the world.

Japan’s Nikkei is down around two per cent, while the Korean and New Zealand markets are more than one per cent lower.

Mr Lucas said while the Australian market had little direct exposure to Greece, traders were concerned about the fallout from a possible Greek debt default and exit from the euro zone.

He said Greece’s exit would raise fresh questions about fellow debt-laden EU countries including Italy and Spain.

“It’s more about the fact that the contagion effect is not known,” he said.

“There is not much you can point to in terms of how this well end and markets hate uncertainty.”

The talks between Greece and its creditors fell apart on Saturday when Greek Prime Minister Alexis Tsipras announced a surprise July 5 referendum on the proposed reform package put forward by Europe.

Greek banks shut until July 7

Meanwhile, banks in Greece won’t open until July 7 – two days after a referendum on bailout proposals – and ATM withdrawals will be limited to 60 euros ($A87) a day.

The government decree on capital controls, published in the official government gazette on Monday, entitled “Bank Holiday break”, lists the measures imposed on financial institutions lasting from June 28 to July 6 and was signed by President Prokopis Pavlopoulos and Prime Minister Alexis Tsipras.

It cited “the extremely urgent and unforeseen need to protect the Greek financial system and the Greek economy due to the lack of liquidity caused by the Eurogroup’s decision on June 27 to refuse the extension of the loan agreement with Greece”.

Banks will re-open on Tuesday, July 7, a government statement said, while cash machines, many of which are dry after massive withdrawals this weekend, will “operate normally again by Monday noon at the latest”.

The 60 euro ATM withdrawal limit is per bank card.

Pension payments will be exempt from the bank transaction restrictions, while there will be “no problem for wages paid electronically into bank accounts”, the statement said.
Internet banking transactions inside Greece will work normally, as will card payments in shops, but transfers abroad will require approval from a Ministry of Finance commission, it said.

Earlier Athens sought to reassure thousands of tourists currently staying in Greece, saying that people with a credit card issued in a foreign country will not be affected by the limits on ATM withdrawals.

The radical measures have been imposed to protect the banking system against the threat of mass panic at the prospect of a possible default by Greece, and the impact of the referendum announcement on negotiations with creditors.

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