The European leaders’ ultimatum to Athens, which could see it ejected from the currency bloc at the weekend, saw traders scramble to safer investments, pushing the yen higher.
Shanghai tumbled almost seven percent and Hong Kong lost 4.74 percent soon after opening, despite Chinese leaders announcing a slew of measures to staunch a mainland bloodletting that has wiped trillions off the country’s markets.
By lunch the losses had eased marginally, with Shanghai off 3.88 percent and Hong Kong 4.20 percent lower.
Elsewhere in Asia Tokyo was 2.14 percent lower in the afternoon, Taipei lost 3.14 percent, Sydney slipped 1.78 percent and Seoul was off 1.06 percent.
“The pricing in of the Greek debt problem is continuing, but we still have a lot of uncertainty,” Hiroichi Nishi, a manager at SMBC Nikko Securities in Tokyo, told Bloomberg News.
“Continuing declines in Chinese stocks, or fears that the Chinese economy will keep slowing down, will weigh on the market.”
In the first step of its renewed bid for funding, Greece’s leftist government must submit detailed reform plans by Thursday, EU President Donald Tusk said after eurozone leaders held an emergency summit with Greek Prime Minister Alexis Tsipras.
All 28 European Union leaders will then examine the plans on Sunday in a make-or-break summit that will either save Greece’s moribund economy or leave it to its fate.
“Tonight I have to say loud and clear — the final deadline ends this week,” Tusk told a news conference.
And European Commission President Jean-Claude Juncker warned “we have a Grexit scenario prepared in detail” if Greece failed to reach a deal, although he insisted he wanted Athens to stay.
The move turns the heat up on Tsipras after Greeks voted Sunday against another round of painful austerity they say has crippled the country.
– Greece endgame –
With the crisis now entering its endgame after more than five months, the euro edged lower Wednesday, sinking to $1.0991 from $1.1007 in New York, although it is up slightly from a five-week low of $1.0916 it touched in US trade. The single currency was also at 134.28 yen against 134.89 yen.
The dollar bought 122.24 yen against 122.55 yen.
On Wall Street the Dow added 0.55 percent, the S&P 500 jumped 0.62 percent and the Nasdaq rose 0.11 percent.
However, US-listed Chinese stocks — including Alibaba and Baidu — took a hit as the shockwaves of the rout in Shanghai reverberated globally.
“China’s stock market rout is now spreading to other financial markets, creating a sweeping sense of panic and liquidity crunch,” Zheng Ge, an analyst at Wanda Futures Co., said.
And Alex Wong, Hong Kong-based asset-management director at Ample Capital, added: “Gradually this will drag other markets lower because the magnitude of a China crisis would be far bigger than anything happening in Greece.”
There are now fears that the hammering to stock markets will hit the wider Chinese economy, the world’s second biggest, which is already struggling with slowing growth.
Wednesday’s falls came despite the government announcing new measures to support the market, while Bloomberg News reported that the recent slump has led at least 1,249 companies to halt trading in the mainland, accounting for 43 percent of total listings.
Mainland Chinese markets have lost about a third of their value in almost a month as spooked investors cash in after a more than 150 percent rally since last summer.
On oil markets US benchmark West Texas Intermediate for August delivery dropped 14 cents to $52.19 a barrel and Brent tumbled 13 cents to $56.72, both reversing an earlier uptick.
Gold fetched $1,154.23 compared with $1,165.74 late Tuesday.