A TV broadcasts an image of leader of the 5 Star Movement Beppe Grillo, at the Democratic Party press center in Rome, Monday, Feb. 25, 2013. The prospect of political paralysis hung over Italy on Monday as partial official results in crucial elections showed an upstart protest campaign led by a comedian making stunning inroads, and mainstream forces of center-left and center-right wrestling for control of Parliament's two houses. (AP Photo/Alessandra Tarantino)
A TV broadcasts an image of leader of the 5 Star Movement Beppe Grillo, at the Democratic Party press center in Rome, Monday, Feb. 25, 2013. The prospect of political paralysis hung over Italy on Monday as partial official results in crucial elections showed an upstart protest campaign led by a comedian making stunning inroads, and mainstream forces of center-left and center-right wrestling for control of Parliament's two houses. (AP Photo/Alessandra Tarantino)
Specialist John O'Hara works at his post on the floor of the New York Stock Exchange Monday, Feb. 25, 2013. Stocks turned lower Monday following signs that Italy could be headed for political gridlock, potentially undermining the country's efforts to reform its economy and rekindling the region's debt crisis. (AP Photo/Richard Drew)
Graphic shows results of Italy???s election
LONDON (AP) ? Political uncertainty in Italy slammed markets hard Tuesday with investors fearful that Europe's debt crisis may be about to rear its head again.
The election has proven so close that final official results are not expected until later Tuesday, at the earliest. But already, the prospect of a political impasse has raised the possibility of further elections down the line.
Though the center-left coalition led by Pier Luigi Bersani appears to have won a narrow victory in the lower house of parliament, the Senate looks split with no party in control.
"Clearly markets are taking fright from the messy and chaotic Italian election result," said Louise Cooper, financial analyst at CooperCity.
In Europe Italy's FTSE MIB index was the worst-performing index, with some of the banking stocks suspended. The index sank around 4.8 percent at the open to 15,583.
The interest rate on the country's benchmark 10-year bond ? an important gauge of investor sentiment ? ratcheted up 0.34 percentage point to 4.78 percent. Meanwhile, investors sought protection in the bonds of more stable and prosperous economies. The interest rate on Germany's 10-year bonds fell 0.07 percentage points to 1.49 percent.
Italy is hugely important for the future of the euro currency. Of the 17 European Union countries that use the euro, it has the second-highest debt burden as a proportion of its annual gross domestic product at 127 percent. Only Greece's is higher.
Over the past year or so, the technocratic government led by Mario Monti, enacted wide-ranging reforms to the budget and the economy. The cost though has been high, with Italy stuck in an 18-month recession and unemployment on the up. Monti was a big loser in the election.
The worry across Europe, and financial markets as a whole, is that the appetite for reform may wane and Italy's parlous debt situation may deteriorate.
The surprise factor was the astonishing vote haul of comic-turned-political leader Beppe Grillo, whose 5 Star Movement capitalized on a wave of voter disgust with the ruling political class.
Though its annual borrowing ? its budget deficit ? is pretty small compared with other euro countries at 3 percent of its gross domestic product, Italy has to splash out around 25 percent of its revenues every year just to service its debt mountain, which stands at around ?2 trillion ($2.65 trillion).
"The election results send a strong signal for change from the electorate who have voted against the traditional political establishment, and the fiscal austerity program endorsed by Europe," said Lee Hardman, an analyst at Bank of Tokyo-Mitsubishi UFJ.
Other stock indexes in Europe opened sharply lower too, following a big retreat in Asia overnight. The Stoxx 50 index of leading European shares was 1.4 percent lower soon after the open. Germany's DAX was down 2.8 percent down at 7,620 while the CAC-40 in France fell 2.6 percent to 3,626. The FTSE 100 index of leading British shares was 1.5 percent lower at 6,260.
The euro has also been hit hard, and was close to $1.30 for the first time since early 2013. It was down 0.1 percent on the day at $1.3062.
The wave of selling in Europe follows big falls on Wall Street and Asia overnight.
In Asia, standout losses were recorded by Japan's Nikkei, which slid 2.3 percent to 11,398 as the yen appreciated to the potential detriment of the country's exporters. The dollar was 0.6 percent lower at $92.06 yen.
Elsewhere in Asia, Hong Kong's Hang Seng dropped 1.3 percent to 22,519 while South Korea's Kospi fell 0.5 percent to 2,000.
Oil prices took a hit too, with the benchmark New York rate 80 cents lower at $92.31 a barrel.
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