Euro-zone stocks, low-rated bonds and the euro are hit as Greece looks set to default on a crucial repayment due to the International Monetary Fund, likely plunging it deeper into financial crisis.As Ciara Lee reports Greece's EU-led bailout also expires at the same time.
D-day for Greece - a 1.6 billion euro repayment due to the IMF at midnight. Athens says it won't meet the deadline. Prime minister Alexis Tsipras broke off negotiations with lenders at the weekend. It plunged the country into financial chaos with banks and the stock market remaining shut. CMC Markets' Jasper Lawler. (SOUNDBITE) (English) JASPER LAWLER, MARKET ANALYST, CMC MARKETS, SAYING: "That does officially put them in arrears with the IMF. Not necessarily a default but arrears. Puts them inside the company of the likes of Zimbabwe. And so the next important date really is going to be the referendum on July 5th." The head of the European Commission made a last-minute offer to try to persuade Greek Prime Minister Alexis Tsipras to accept the conditions of a bailout deal, ahead of the referendum. It's now being viewed as a vote on whether to accept the deal and stay in the euro. (SOUNDBITE) (Greek) GREEK PRIME MINISTER ALEXIS TSIPRAS SAYING: "If the Greek people want to proceed with austerity measures in perpetuity, with austerity plans which will leave us unable to lift our heads, to have thousands of young people leaving for abroad, to have high unemployment rates, and new programmes and loans, if this is their choice we will respect it but we will not be the ones to carry it out." The real test could come on July 20 when Greece must repay bonds held by the ECB itself. If it defaults on that, the central bank could be forced to pull the plug on the country's ailing banks. But despite the increasing possibility of a Greek exit European markets seem to be taking it on the chin, with a muted sell-off in morning trade. (SOUNDBITE) (English) JASPER LAWLER, MARKET ANALYST, CMC MARKETS, SAYING: "One of the interesting areas in terms of market reaction has been the euro. You'd think the euro being the centre piece of this whole game, we're talking about the future of the euro, it has actually held up relatively well. And so if you do have European exposure to European equities, obviously you will be down on that exposure to the equities front at the moment." The majority of Greeks want to stay in the euro zone. And investors are still pinning their hopes on a deal eventually being thrashed out - but one report now puts the prospect of a Grexit at 45 percent.