Euro slips, bonds rally on Greek upset

By Wayne Cole SYDNEY (Reuters) - The euro fell sharply in Asia on Monday after polls suggested the Greeks had overwhelmingly rejected austerity measures demanded in return for bailout money, putting in doubt its continued place in the single currency. In a typical "risk-off" reaction top-rated sovereign bonds were well bid while U.S. equity futures dropped around 1.4 percent. Oil prices also took a spill with Brent crude falling 67 cents to $59.65 a barrel. While the price action was choppy, dealers emphasised that markets were orderly with no signs of financial strain and expectations were high that the European Central Bank would step in early with a pledge of extra liquidity. The Japanese government said it was ready to respond as needed in markets and was in close touch with other nations. The euro was down 0.9 percent at $1.1012 but off an early low of $1.0967. It had initially dropped around 1.5 percent on the safe-haven yen only to find a big buy order waiting, which pared its losses to 134.53. Likewise, the dollar recouped its early drop to be only a touch softer at 122.34 yen. The dollar index added 0.3 percent to 96.434. The latest reports from Greece said around 60 percent of those voting in the referendum had backed the government and rejected the bailout conditions. [TOP/CEN] Euro zone finance ministers will meet on Tuesday to prepare an emergency euro zone summit on Greece. "A lot depends now on what the ECB does with liquidity support for the Greek banks," said Antonin Jullier, head of equity trading strategy at Citi. "The ECB has the capacity to limit the spread of contagion ... but we might still see a fall of 3 percent on European markets on Monday." Demand for highly rated sovereign debt saw U.S. 10-year Treasury futures jump a full point, while Australian 10-year bond futures climbed 7 ticks. Fed funds futures <0#FF:> also rallied as investors wagered the endless uncertainty in Europe would make the Federal Reserve more wary of raising U.S. interest rates, or at least to go more gradually once it began. (Editing by Dean Yates)