LONDON Feb 26 Euro zone shares sank to three month lows on Tuesday after an Italian election stalemate renewed concerns about the future of the euro zone and sent investors in search of insurance against a deeper sell-off.
No group managed to secure a majority in the Italian parliament, heralding weeks of political uncertainty and raising the prospect of a government between sworn enemies - the centre right led by former prime minister Silvio Berlusconi and the centre left under Pier Luigi Bersani.
Italy's benchmark FTSE MIB index sank 4.9 percent, posting its biggest daily fall in nearly a year.
The EuroSTOXX 50 index provisionally closed down 3.1 percent at 2,570.62 points, its lowest finish since Nov. 28. The move extends the euro zone blue chip index's retreat from an 18-month high of 2,754.80 points hit at the end of January.
"It introduces a whole range of uncertainty at a time when the markets were quite toppy anyway and were probably ready for some sort of correction," said Paul Jackson, strategist at Societe Generale.