Greece shocks markets with referendum on austerity

NEW YORK (AP) — Worries that a planned Greek referendum could scuttle a plan to resolve Europe's debt crisis rattled markets this morning.

Stocks indexes plunged in the U.S. and Europe. The dollar and U.S. government bond prices rose as traders moved into assets considered safe.

The Greek government shocked financial markets with news that it would put its cost-cutting plan to a popular vote. A vote against the plan could lead the country to drop the European currency and default on its debt.

The Dow Jones industrial average dropped 210 points, or 1.8 percent, to 11,744 as of 10 a.m.

The S&P 500 fell 25, or 2 percent, to 1,228. The Nasdaq composite fell 55, or 2.1 percent, to 2,628.

Banks fell hard as investors worried about how exposed U.S. banks are to European debt. Both Citigroup and Morgan Stanley fell more than 7 percent. JPMorgan Chase & Co. fell 5.4 percent, the largest drop among the 30 stocks in the Dow.

European markets fell ever more. Germany's DAX index fell 4.7 percent and France's CAC-40 fell 4.8 percent. French banks have large holdings of Greek government bonds and would be exposed to severe losses if Greece goes through a disorderly default on its debt.