Last checked at 
LONDON (Alliance News) - London share prices are significantly lower Monday mid-morning, amid a sell-off in European equities after Greece imposed capital controls and scheduled a referendum for next Sunday on the terms offered by its creditors for a debt bailout.
Only mining stocks are bucking the negative trend, on a rise in the price of gold.
UK stocks have recovered slightly after gapping lower at the open. The FTSE 100 is down 1.7% at 6,641.10, while the FTSE 250 is down 1.3% at 17,591.79, and the AIM All-Share is down 1.4% at 758.04.
European major indices, closer to the action with regards to Greece, have suffered more early Monday, with the CAC 40 in Paris down 3.0% and the CAC 30 in Frankfurt down 2.9%.
European Union Economic Affairs Commissioner Pierre Moscovici said on Monday that a deal between Greece and its creditors is still possible despite the chaotic developments over the weekend, while saying the referendum called by the Greek government must be respected.
"Greece is a euro area member country, and it must remain so," Moscovici asserted in an interview with French radio RTL. "We are just centimeters away from an agreement," he said, expressing hope that the impasse ends. The "door is open for negotiations".
Moscovici's words come after Prime Minister Alexis Tsipras said Sunday that Greece is imposing capital controls and ordering the closure of banks, as Athens scrambles to avert the collapse of the country's financial system. In a televised speech to the nation Sunday, Tsipras said the Greek central bank recommended the measures after the European Central Bank decided against raising the amount of emergency credit that it provides to the Mediterranean country's banks.
Tsipras urged Greeks to be patient and retain their composure, assuring them that their bank deposits were "fully secure".
The Greek banks will remain closed until July 6 and introduced a limit of EUR60 on daily cash withdrawals from cash machines.
Earlier Sunday, the ECB said it was maintaining its Emergency Liquidity Assistance to the Greek financial system at current levels. The ECB is one of Greece's three international creditors, alongside the International Monetary Fund and the European Commission. However, the level of ELA support - currently at EUR89 billion - could prove not enough as queues grow longer outside cash machines.
Sunday's developments came amid deep uncertainty in Greece after its parliament approved a referendum on the offered terms of the country's bailout. The referendum, which is due on July 5, was pushed by Tsipras after he was left unhappy at the terms of the bailout offered by creditors, which rejected Greece's appeal to extend its bailout into July.
"Today?s falls have...left the FTSE100 virtually flat for the year, with the volatility set to continue even if the general view is that a Greek solution may yet be cobbled together," says Richard Hunter, head of equities at Hargreaves Lansdown. "The IMF deadline tomorrow now looms large, whilst investors will now be looking for any possibility of an eleventh hour rescue to prevent either or both of a Greek default or exit."
Mike van Dulken, head of research at Accendo Markets, believes Greece is sure to miss Tuesday's IMF debt payment. "This may be the least of our worries as a rejection vote next Sunday could seal the country's exit from an altogether more important one - the Eurozone single currency - and contagion risk is very real."
In the FTSE 100, there are only two stocks in the green. Randgold Resources and Fresnillo are up 1.2% and 0.5%, respectively, as miners benefit from a rise in the price of gold. Gold is up at USD1,178.16. In the FTSE 250, Centamin and Acacia Mining are up 1.2% and 0.4% respectively.
TUI Group leads blue-chip fallers, down 6.3%, while fellow travel stock International Consolidated Airlines group is down 2.4%. Dixons Carphone is down 2.9%, while Coca-Cola Hellenic Bottling Co is down 2.7%. Meanwhile, Hargreaves Lansdown is down 2.3%, while GKN is down 2.3%.
Banks also are suffering, with Standard Chartered down 2.4%, Barclays down 2.0%, HSBC Holdings down 1.7% and Lloyds Banking Group down 1.5%.
Like its blue-chip peer TUI, FTSE 250-listed Thomas Cook Group also is lower, down 7.2%.
Fidelity China Special Situations is down 4.2%, after Chinese stocks were sold off again on Monday. The Hang Seng ended down 2.6% and the Shanghai Composite closed down 3.3%. Meanwhile, the Japanese Nikkei 225 closed down 2.9%.
The Chinese central bank announced further reduction of interest rates, its fourth move in around seven months, in a bid to boost economic growth, according to a statement on Saturday. The bank cut one-year deposit rate by 25 basis points to 2%, while one-year benchmark lending rates were lowered by 25 basis points to 4.85%. The new rates will come into effect on Sunday. The reserve requirement ratio for banks with sizeable lending to farmers and small businesses has been cut by 50 basis points.
Still in the economic calendar Monday, German inflation is at 1300 BST. In the US, pending home sales are due at 1500 BST, while the Dallas Fed Manufacturing Business index is due at 1530 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
Copyright 2015 Alliance News Limited. All Rights Reserved.
