Greece default fears stir markets again

Another week, another Greece crisis.

After ending last week with the biggest gain for blue-chip stocks in more than two months, Wall Street closed lower though stocks slowly recovered throughout the session.

This followed confirmation by a Greek official who said his country was "close to an agreement" with international lenders over cutbacks that are conditional to secure fresh aid.

The focus has returned to Greece's debt crisis after a weekend meeting of European finance ministers showed little progress. Euro-zone governments threatened to withhold the next round of scheduled aid to Greece, sparking increased fear of a default.

Crude oil futures have dropped sharply, trading around $US85 a barrel, while the US dollar has gained versus the euro but has lost ground against the yen.

Sharemarkets in Europe and Asia were also lower. At the close (8am NZ time), the Dow Jones Industrial Average was down 108.08 points, or 0.9%, to 11,401.01.

The S&P 500 index was down 1.0% to 1204.09 and the Nasdaq Composite was down 0.4% to 2612.83.

In politics, President Barack Obama's proposed cutting $US3.6 trillion from the nation's budget deficit by ending tax breaks for the wealthy plan, while in economic news, the housing market index fell worse than expected in September.

Other markets: Europe, Asia fall
European stock markets fell sharply, with leading banks losing the most. The Stoxx Europe 600 index dropped 2.3% to end at 224.96, after gaining 2.5% last week.

In London, Lloyds Banking Group tumbled nearly 7%, while Barclays dropped 6.6%. The FTSE 100 index slid 2% to 5259.56.

The French CAC 40 index lost 3% to 2940 and the German DAX 30 index dropped 2.8% to 5415.91.

In Asia, Hong Kong's Hang Seng Index led the sell-off, falling 2.8% to 18,917.95, while the Shanghai Composite Index shed 1.8% to 2437.79.

Australia's S&P/ASX 200 Index fell 1.6% 4081.50, Korea's Kospi declined 1.0% to 1820.94 and India's Sensex fell 1.1% to 16,745.35.

Japanese equity markets were closed for a holiday.

Commodities: Oil, gold down
Oil futures fell sharply with light, sweet crude for October delivery down $US2.5, or 3%, to $US85.75 a barrel in New York. The contract expires on Tuesday.

Brent crude was $US2.37, or 2.4%, lower at $US109.26 a barrel.

Gold futures fell as investors sold their holdings to cover losses in other markets. Gold for September delivery was off $US30.40, or 1.7%, at $US1781.70 an ounce in New York.

Currencies: Euro falls on US housing data
The euro dipped below $1.36 to a session low of $1.3592 after softer-than-expected US housing the data while the yen advanced on major rivals as investors shunned riskier assets.

The yen climbed to a fresh one-month high against the US dollar and made new strides against the euro and UK pound.

The dollar fell to a session low of ¥76.32, while the euro plummeted 1.7% to a one-week low against the yen at ¥103.96.

The pound continued its recent drift toward a record-low of ¥118.89 by falling as far as ¥119.48.