This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.bbc.co.uk/news/business-21583576

The article has changed 16 times. There is an RSS feed of changes available.

Version 5 Version 6
European markets fall after Italian election deadlock European markets fall after Italian election deadlock
(35 minutes later)
European markets have opened lower, with the inconclusive election result in Italy raising fears that political deadlock will delay economic reforms.European markets have opened lower, with the inconclusive election result in Italy raising fears that political deadlock will delay economic reforms.
Italy's FTSE MIB index fell 4.7%, while London's FTSE 100 shed 1.5% and share markets in Frankfurt and Paris also fell more than 2% at the start.Italy's FTSE MIB index fell 4.7%, while London's FTSE 100 shed 1.5% and share markets in Frankfurt and Paris also fell more than 2% at the start.
The yield on Italian government bonds also rose sharply, implying markets are more wary of lending to Italy.The yield on Italian government bonds also rose sharply, implying markets are more wary of lending to Italy.
Earlier, stock markets in Asia had closed lower.Earlier, stock markets in Asia had closed lower.
Japan's main Nikkei 225 stock index lost 2.2%, Hong Kong's Hang Seng fell 0.8% and Australia's ASX was down 1%.Japan's main Nikkei 225 stock index lost 2.2%, Hong Kong's Hang Seng fell 0.8% and Australia's ASX was down 1%.
Oil prices also dropped, hit by worries that uncertainty in the eurozone could hit demand, with Brent crude falling 87 cents to $113.57 a barrel.
With all domestic votes counted in Italy's parliamentary election, the centre-left bloc won the lower house by a tiny margin, but did not secure a majority in the Senate.With all domestic votes counted in Italy's parliamentary election, the centre-left bloc won the lower house by a tiny margin, but did not secure a majority in the Senate.
Fears are that a split parliament will make it harder for one group to push through their plans to revive the economy, and that may stall Italy's process of cutting its public debt levels.Fears are that a split parliament will make it harder for one group to push through their plans to revive the economy, and that may stall Italy's process of cutting its public debt levels.
'Chilling message''Chilling message'
Banks were the biggest fallers on the stock markets, with shares in major banks across Europe down more than 4%.
The yield on Italian 10-year government bonds rose to 4.77% from 4.48%, and the gap between the yield on Italian and German 10-year bonds widened.The yield on Italian 10-year government bonds rose to 4.77% from 4.48%, and the gap between the yield on Italian and German 10-year bonds widened.
Former Prime Minister Silvio Berlusconi, who has conceded the lower house to Pier Luigi Bersani's centre-left bloc, played down the significance of the spread, and said he was not worried about market reaction to the vote.Former Prime Minister Silvio Berlusconi, who has conceded the lower house to Pier Luigi Bersani's centre-left bloc, played down the significance of the spread, and said he was not worried about market reaction to the vote.
Giuseppe Fontana, professor of monetary economics at Leeds University Business School, said Italian voters had sent a "chilling message" to the markets and policy makers.Giuseppe Fontana, professor of monetary economics at Leeds University Business School, said Italian voters had sent a "chilling message" to the markets and policy makers.
"It is not difficult to speculate that this morning markets and policy makers are asking the big question - what is the future of the euro area?" he told the BBC."It is not difficult to speculate that this morning markets and policy makers are asking the big question - what is the future of the euro area?" he told the BBC.
"Italy is the third largest economy in the eurozone area and there is a question about is this a way, a democratic way, to tell markets and policy makers to change course about austerity measures and start to stimulate again the economy?""Italy is the third largest economy in the eurozone area and there is a question about is this a way, a democratic way, to tell markets and policy makers to change course about austerity measures and start to stimulate again the economy?"
Georg Grodzki, head of credit research at Legal & General Investment Management, said the Italian result would leave markets guessing for a while.Georg Grodzki, head of credit research at Legal & General Investment Management, said the Italian result would leave markets guessing for a while.
"Uncertainty is not good for confidence. It's not bad enough for an immediate abrupt sell-off but it could well build over the next few months into some crisis," he said."Uncertainty is not good for confidence. It's not bad enough for an immediate abrupt sell-off but it could well build over the next few months into some crisis," he said.
'Safe haven' Civil unrest 'likely'
In Asia, exporters led the drop in shares on worries that sales to Europe would suffer. With political instability likely to continue at least in the near term, Angus Campbell from Capital Spreads said: "The uncertainty that this causes is enough to make anyone nervous and we are likely to see an interim administration for a number of months before fresh elections, unless a working coalition can be formed."
Companies such as electronics maker Sony and camera firm Nikon still get a large share of their revenue from Europe, and analysts said any worsening of economic conditions and consumer sentiment could knock sales. For more than a year Italy was led by technocrat Mario Monti, appointed after Mr Berlusconi's resignation in November 2011 amid an acute debt crisis.
"It revives memories of risks in the eurozone," said Yuji Saito from Credit Agricole in Tokyo. "I doubt that the situation will turn into a disaster, but we need to carefully monitor developments." He was tasked with reforming the economy, and introduced unpopular economic austerity measures, implementing spending cuts and tax rises.
The fall in Japanese shares come after the Tokyo market has enjoyed a surge in recent months, as the value of the yen fell steeply after steps by the central bank to extend its asset-purchase programme. Mr Monti resigned in December after Mr Berlusconi's conservative party withdrew its support from his government. Although he ran in the latest election, his bloc won only 10% of the vote, with the majority of voters rejecting austerity.
Critics have accused Tokyo of deliberately weakening the currency to help its struggling exporters abroad. Ishaq Siddiqi, market strategist at ETX Capital, warned of future turmoil in Italy.
"A negative impact (from Europe's problems) to the Japanese market is unavoidable for now, but hopes for Abenomics have not changed," said Takuya Takahashi, from Daiwa Securities, referring to the name given to the monetary policy championed by new prime minister Shinzo Abe to get Japan out of deflation. "What is more worrying for investors is that the political deadlock in Italy would suggest that even if we do see a market-friendly scenario materialise with a reform-minded government taking control, the fact that Berlusconi managed to gain such an influence with his anti-austerity campaign means that we are likely to see a rise in civil unrest in Italy."
The only major Asian market to buck the trend was Shanghai, which was slightly higher. Investors are now looking towards a testimony later on Tuesday from US Federal Reserve chairman Ben Bernanke.
Investors are now looking towards testimony later on Tuesday from Federal Reserve chairman Ben Bernanke.
Global markets were shaken last week by an indication from the Fed that it might scale back its strong monetary stimulus sooner than expected.Global markets were shaken last week by an indication from the Fed that it might scale back its strong monetary stimulus sooner than expected.