LONDON Feb 26 European shares fell on Tuesday
after elections in Italy left the country facing political
deadlock, with banks suffering the most as the vote raised new
fears over the euro zone's debt crisis.
The pan-European FTSEurofirst 300 index declined by
1.3 percent to 1,151.73 points while the euro zone's blue-chip
Euro STOXX 50 index fell 2.6 percent to 2,584.98
Italy's benchmark FTSE MIB equity index slid an
initial 1.6 percent but that was before the country's banking
stocks began trading. When they did the market as a whole
quickly became the worst performing, down 5 percent.
Market concern that the country's election result, in which
anti-euro parties took more than 50 percent of the vote, could
hamper economic reforms and fuel its costs of borrowing, was
seen most markedly in the financials sector.
The STOXX Europe 600 Banking Index was the
worst-perfoming European equity sector, falling 2.8 percent, led
by falls for Italian lender Intesa Sanpaolo, down 10
"There's no clear outcome in the Italian election, and the
markets hate uncertainty," said Terry Torrison, managing
director at Monaco-based McLaren Securities.
"You could easily see a three or four percent sell-off in
the next couple of sessions," he added.
Syz Asset Management's chief economist, Fabrizio
Quirighetti, saw a potential 5 percent fall on European equity
markets this week and added that Spain could face fresh
pressure, with the Spanish IBEX equity index falling 3.4
Clairinvest fund manager Ion-Marc Valahu said he had been
buying the Euro STOXX Volatility index on expectations
of an uncertain Italian vote result. The index closed at 21.35
points on Monday, close to its 2013 high.