The Australian sharemarket has hit a six-month low, slumping for a third straight day as investors brace for a possible Greek exit from the eurozone.

Greece extended the closure of its banks to six days after the government called on voters to reject terms put forward by its creditors in a referendum this coming Sunday, sending investors across Asia into a selling frenzy.

The Australian market plunged by more than 2 per cent, while Tokyo’s Nikkei index fell 2.25 per cent at the start of trading in Japan.

Meanwhile in China, the government’s stimulus measures failed to prevent panic-selling on the markets, with the Shanghai Composite Index tumbling lower.

Hong Kong’s Hang Seng index also dropped heavily, sending risk-off sentiment towards the local market.

At the 4.15pm (AEST) official market close, the benchmark S&P/ASX200 index was down 123.4 points, or 2.23 per cent, at 5,422.5, while the broader All Ordinaries index dropped 119.5 points, or 2.16 per cent, to 5,416.6.

The euro also took a hit, dropping through the $US1.10-mark for the first time since early June. The Australian dollar, meanwhile, reached its lowest point in more than two months, falling to the low US76c range, before staging a mild recovery throughout the day.

“This is now a rolling risk event,” IG market strategist Evan Lucas said. “Mitigation is all that can be done.”

Meanwhile, China is flirting with a technical bear market, Mr Lucas said, prompting a response from the People’s Bank of China, which cut the reserve requirement ratio on its banks for the fourth time in eight months at the weekend.

Macquarie Private Wealth division director Martin Lakos said today’s losses were entirely a “de-risking” process.

“There are potential financial risks with Greece exiting the eurozone, and risks to the Greek banking system itself,” Mr Lakos said, but added that the European banking system was resilient enough to withstand a Grexit.

Mr Lakos said the Chinese government’s stimulus would usually be seen as a a positive, but money was going to be taken out of the market after “a pretty hard run”. The Shanghai Composite Index is down more than 20 per cent since its peak just over a fortnight ago.

“The bears will say this is a clear sign that the Chinese markets have another 20 per cent downside,” IG chief market strategist Chris Weston said.

But he said the Australian and Japanese markets were “smashed” today and look highly vulnerable to further selling — “a short seller’s favoured hunting ground”.

The financial sector fell sharply, with the big four banks deep in the red, dragging the market lower.

Mining stocks plummeted today, with the price of iron ore continuing to trend toward the $US60 a tonne mark as oversupply fears remain top of mind, dropping 1 per cent in offshore trade.

Looking ahead, investors will be waiting for the US jobs report on Thursday, but all eyes will be watching Greece and China for any developments.