Markets dive on Italy election

European shares were sent into an early-trading dive on Tuesday morning after elections in Italy left the debt-stricken eurozone nation facing political deadlock.

Markets across the continent reflected deep concerns Italy's current situation might hamper much-needed economic reforms and plunge the 17-member euro area into yet another period of uncertainty.

The pan-European FTSEurofirst 300 index declined by 1.3 percent swiftly after the start of trading, while the eurozone blue-chip Euro STOXX 50 even fell by 2.6 percent. Italy's own benchmark FTSE MIB equity index was hit hardest, plummeting by some 5 percent in the morning.

Nervous markets

Germany's blue chip DAX 30 was also unable to escape the general trend, losing well over 2 percent in early trading, with only health product maker Fresenius able to gain on reporting a 22-percent increase in net profit for 2012.

"There's no clear outcome in the Italian election, and the markets hate uncertainty," said McLaren Securities economist Terry Torrison.

Bond markets were also seen in a jittery state on Tuesday, with crisis-stricken southern European nations most affected. Short-term bonds with a two-year maturity became a lot more expensive particularly for Portugal, Italy and Spain, as long-term, 10-year bills also showed the same trend.