By Aaron Sheldrick and Henning Gloystein
TOKYO/SINGAPORE (Reuters) - Oil prices fell sharply in early trading on Monday after Greece rejected austerity measures demanded in return for bailout money and as China rolled out an unprecedented series of steps over the weekend to prevent a full-blown stock market crash.
In a referendum on Sunday, Greeks overwhelmingly rejected austerity measures demanded in return for bailout money, putting in doubt its continued place in the single currency and pulling down the euro
In China, stock markets face a make-or-break week after officials rolled out a series of measures to prevent a full-blown stock market crash that would threaten the world's second-largest economy.
Both U.S.
The falls meant that both crude futures were at their lowest level since mid-April.
"Uncertainty over Greece is bearish for oil. It adds an extra negative factor on top of the turmoil in Chinese financial markets, the recent rise in U.S. drilling rigs, and a potential increase in Iranian oil supply," said Olivier Jakob, senior energy markets analyst at Petromatrix in Zug, Switzerland.
"The main implication is for euro/dollar and I think it will put additional pressure on the euro," he added.
A strong dollar puts pressure on oil markets as it makes dollar-traded fuel more expensive for countries using different currencies.
The euro slid more than 1 percent against the dollar and European stock and bond markets were poised to take a sharp hit with the resumption of trade on Monday, stunned European leaders called a summit for Tuesday to discuss their next move.
In China, brokerages and fund managers agreed to buy massive amounts of stocks to support markets which saw 30 percent falls since June, helped by China's state-backed margin finance company which in turn would be aided by a direct line of liquidity from the central bank.
China has also orchestrated a halt to new share issues, with dozens of firms scrapping their IPO plans in separate but similarly worded statements over the weekend, in a tactic authorities have used before to support markets.
Adding to the bearish mindset for oil, U.S. drilling increased for the first time after 29 weeks of declines, data showed on Thursday, the strongest sign yet that higher crude prices are coaxing producers back to the well pad.
Production in Russia and the Organization of the Petroleum Exporting Countries (OPEC) is also at near records.
(Additional reporting by Dmitry Zhdannikov in London; Editing by Michael Perry)
