Greece's main stock index lost close to a fifth of its value on Monday as it reopened for the first time in more than five weeks.

The Athex Composite slumped close to 23% in the first few minutes before recovering slightly to trade around 20% lower on the day, according to FactSet data. The index was last open June 26.

Frances Hudson, a strategist at Standard Life Investments, said the fall may be an overreaction but it showed that "things are going to be very tough for Greece" despite a fresh deal with its international creditors.

Some stocks were suspended, FactSet showed, but all constituents that were trading were down at least 5%. Lenders National Bank of Greece SA, Piraeus Bank SA, Eurobank Ergasias SA and Alpha Bank AE were among the biggest fallers.

Greek banks had been closed along with the Athex after Greek Prime Minister Alexis Tsipras said the country would hold a referendum on whether to accept terms that its international creditors were offering in return for fresh financial aid.

Greek voters rejected those terms, raising fresh doubts about the country's future in the eurozone.

Later in July, the government eventually reached a compromise with creditors, accepting some tough conditions, and the banks reopened with restrictions on July 20.

Over the last 12 months, and taking Monday's sharp losses into account, the Athex Composite has declined around 45% in value, making it one of the worst-performing stock indexes globally.

Monday's stock declines look dramatic "because it's the market trying to catch up on five weeks of events," said Simon Derrick, head of market strategy at BNY Mellon. "But for a true indication of investor appetite we should look at bond markets," he said.

On Monday, Greek government bond prices fell but remained near levels seen over the past two weeks. Yields on Greece's two-year bonds rose 0.16 percentage point to 21.0%. Ten-year yields rose 0.02 percentage point to 11.9%.

Short-term yields rising above those on longer-dated bonds is often a sign that investors are worried about the risk of default. Yields rise as bond prices fall.

Greek government bond prices slumped as the crisis intensified, pushing two-year yields above 50% in the first part of July, although trading was limited during the stock-market shutdown.

Separately Monday, data showed that the Greek Purchasing Managers Index fell to 30.2 for the month of July, the lowest level recorded in the series' 16-year history.

Christopher Whittall contributed to this article.

Write to Josie Cox at josie.cox@wsj.com

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