European stocks dived in early trading Monday as investors fear Greece could be heading for a eurozone exit, with a number of indices shedding more than four percent.
The European single currency earlier dropped below $1.1 with Greece ever closer to defaulting on its debt.
"We're seeing a flight for safety in financial markets at the start of the week as investors respond to the actions of the Greek government over the weekend that has set in motion a series of events that may ultimately lead to Greece exiting the eurozone," said Craig Erlam, senior market analyst at Oanda trading group.
"The euro experienced heavy selling... as traders sought the safety of the yen, Swiss franc and gold to protect against the negative fallout from events in Greece."
Shortly after the start of trading, Frankfurt's DAX 30 was showing a loss of 4.26 percent to 11,003.17 points compared with Friday's closing level.
In Paris the CAC 40 dived 4.23 percent to 4,845.31 points. The main indices in Milan and Madrid each plummeted by 4.35 percent in value.
Outside the eurozone, London's benchmark FTSE 100 lost 2.14 percent to 6,609.69 points.
Greek authorities ordered Athens' stock market to close Monday, alongside a decision to shut the country's banks for a week and impose capital controls.
The drastic measures to protect Greece's banking system against the threat of mass panic came after the European Central Bank said it would not increase its financial support to Greek lenders, despite early signs of a chaotic bank run.
"Greece's decision to shut banks over the weekend is just the most dramatic element of a crisis that has spiralled out of control," said Chris Beauchamp, senior market analyst at traders IG.
"Time has almost run out to keep Greece in the eurozone, but even now it is perhaps unwise not to discount the possibility of an emergency package that will avert disaster," he added in a client note.
A weekend of high drama began with Prime Minister Alexis Tsipras's unexpected call for a July 5 referendum on creditors' latest reform proposals after bailout talks in Brussels collapsed.
In response, angry EU and IMF creditors rejected a request to extend the nation's bailout beyond its June 30 expiry date, sparking fears Greece could default on a key debt payment to the IMF due the same day, and possibly crash out of the eurozone.
In foreign exchange deals on Monday, the euro slumped as low as $1.0952. About 0730 GMT, the European single currency stood at $1.1073, down from $1.1160 late in New York on Friday.
Spain and Italy's borrowing costs on international bond markets meanwhile soared, while Asian markets crashed lower.
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