European bond and stock markets saw a sharp sell-off on Monday after a shock result from the Italian election, where no political group managed to win a majority vote.
While the centre-left coalition led by Pier Luigi Bersani won the lower house, the party did not gain a majority vote in the upper house necessary for an overall victory.
Meanwhile, the Five Star protest movement of comedian Beppe Grillo emerged as the strongest party in the country and Silvio Berlusconi's centre right bloc threatened to challenge the close tally.
The result will see the country face a political stalemate as competing parties attempt to form a functioning government.
As the results of the election appeared to offer no end to the eurozone crisis, investors were quick to sell off their European holdings.
The yield spread on ten-year Italian bonds over German bunds jumped 30 basis points to 290 in late trading.
Italy's FTSE MIB index nosedived from its high point of 16,871 at 15.32 CET yesterday to close at 16,352 yesterday.
This morning saw futures for the Euro STOXX 50 fall 3.1%, according to Reuters, signalling a sharply lower open for the European markets.
The euro also fell to an almost seven-week low against the dollar to $1.3042 in Asian trading on Tuesday; its lowest point since January.
In the US, the S&P 500 fell 1.83% to finish the day at 1,488, marking its worst decline since 7 November, as the divided result in Italy and the potential for US budget cuts weighed on sentiment.
However, the FTSE shrugged off Moody's downgrade to finish yesterday's trading 1.01% higher at 6,355.
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