Asia markets fall on Greece fears after referendum call

Investors in Asia have been worried about the impact of Greek default on the region's growth

Asian markets have fallen after Greek Prime Minister George Papandreou said that a referendum on the latest bailout will go ahead.

Eurozone leaders had agreed to write off 50% of Greece's debt as part of the deal, but there are now doubts whether it can be implemented.
The Nikkei 225 index fell 2.2%, South Korea's Kospi shed 0.6% and Australia ASX 200 dropped 1.1%
A Greek default may hurt Europe's growth and dent demand for Asian goods.
"European worries have re-emerged, which put pressure on US stocks and will also pressure the market here," said Yumi Nishimura of Daiwa Securities.
'Huge shock'

Mr Papandreou had announced the plans for referendum on Monday. The decision surprised eurozone leaders as well as market analysts and resulted in sharp falls in global markets.

The Dow Jones index ended 2.5% lower on Tuesday, while in Europe London's FTSE 100 ended trading down 2.2%, while the Frankfurt Dax fell 5% and the Paris Cac 40 dropped 5.4%.
"It's a huge shock to everyone," said Eric Lascelles, chief economist of RBC Global Asset Management in Toronto.
"It could jeopardize the bailout package, cause a disorderly Greek default, and end up costing the eurozone and banks more money."
However, despite the market reaction and the concerns expressed by the eurozone leaders, the Greek prime minister held an emergency Cabinet meeting late on Tuesday at which he insisted that the referendum will go ahead.
Growing uncertainty The bailout package for Greece comes with conditions of austerity measures including public sector pay cuts and tax rises in order to reduce the country's debt.
However, opinion polls in Greece have shown that most people do not support the deal and there have been demonstrations against the austerity measures across the country.

This has fanned fears that the referendum may see Greek citizens reject the deal, a move that may eventually result in a Greek default. At the same time, the Greek government is set to face a confidence vote on Friday.
To make matters worse, one MP from the governing Pasok party has resigned, cutting Mr Papandreou's majority to just two.
"The government may actually fall and there may need to be a re-election delaying the whole process," Hans Goetti chief investment officer of Finaport told the BBC.
"That creates even more uncertainty,"
Analysts warned the growing uncertainty about the outcome of the debt crisis may see investors stay away from the markets.
"For the time being, the risk of political judgements triggering sharp price swings will persist, particularly in markets with low liquidity," said Naohiro Niimura of Market Risk Advisory Co.
"Under such circumstances, risk aversion measures are limited as the entire market will move to shun risks," he added.
Broader falls The uncertainty about the outcome of the Greek debt crisis also resulted in a fall in oil prices as investors looked to stay away from riskier assets.
Brent Crude fell 0.5% to $109 per barrel in Asia trade, while Light Crude dipped 0.8% on concerns that a slowdown in Europe may hurt demand.
Analysts warned that oil prices may fall further in the coming days.
"Brent could fall further to $100 [per barrel] because we are anxious over where the world economy is going," said Yusuke Seta of Newedge Japan. "The situation is very vulnerable."
At the same time, gold, which is considered by many as a safe asset in times of economic uncertainty, gained with US gold futures up by 1%, while spot gold rose 0.4%.