Tokyo's Nikkei index drops 1.65% after Greek 'No' vote

TOKYO - Tokyo's benchmark stock index dropped 1.65 percent at the start on Monday, one of the first major markets to open after Greeks voted to reject austerity measures demanded by the cash-strapped nation's creditors.

The Nikkei 225 at the Tokyo Stock Exchange fell 339.64 points to 20,200.15 in the first few minutes of trading, as investors digested the news which boosts the chances of Greece tumbling out of the eurozone.

European leaders reacted with a mix of dismay and caution Sunday after Greek voters defied their warnings of a possible "Grexit" by saying a resounding "No" to creditors' harsh bailout terms.

Jittery investors fled to the yen - a safe haven during times of turmoil - as the vote sparked uncertainty about what happens next following months of fruitless talks between Greece and its EU-IMF creditors before Sunday's hastily arranged referendum.

On forex markets, the dollar slipped to 122.58 yen from 123.05 yen on Friday while the euro was also lower at 134.91 yen from 136.31 yen.

But the single currency held up against the dollar, after dropping in the immediate wake of the vote. It was at US$1.1014, ticking up from US$1.0963 soon after early results of the bailout reforms vote were out.

"The Greece 'No' vote is a surprise," Shoji Hirakawa, chief equity strategist at Okasan Securities, told Bloomberg News.

"But the key is that the direction is going toward more talks after this."