Japan's Nikkei plunged more than two per cent after elections in Greece and France
Renewed uncertainty over Europe's ability to deal with its debt crisis following elections in Greece and France has hammered stock markets, with the main exchange in Athens down a massive 8%.
Investors have been particularly spooked by the election in Greece, which resulted in a split parliament where no party looks like it will be able to form a government.
The two parties that governed as a coalition for the past six months were pummelled to the benefit of more extreme parties of the right and left. The socialist Pasok party suffered the biggest retreat. Its share of the vote collapsed from around 43% in the last election in 2009 to a little over 13%.
A period of uncertainty looms for the bailed-out country, which is in its fifth year of recession and has more than half of its youth out of work following big spending cuts and tax increases in return for crucial international bailout funds. If no government can be formed that can command a majority in parliament, another general election within the next two months seems possible.
With more than 99% of the vote counted, conservative New Democracy led with 18.9% and 108 of parliament's 300 seats. Party leader Antonis Samaras, who backs Greece's bailout commitments for austerity, will launch coalition-forming talks later.
Further weighing on sentiment is the defeat of French president Nicolas Sarkozy to his socialist rival Francois Hollande, who has campaigned on the need for more growth-generating economic policies and less reliance on austerity. Final results from France's presidential election show Mr Hollande narrowly defeated Mr Sarkozy with 51.62% of the vote.
Even German Chancellor Angela Merkel suffered a setback in a regional election in the northern state of Schleswig-Holstein. Mrs Merkel and her government have borne the brunt of the criticism over Europe's austerity drive.
In Europe, Germany's DAX was down 1.4% at 5,468, while the CAC-40 in France fell 1.2% to 3,125. The FTSE 100 is closed for the bank holiday. Greek shares suffered worse, trading 8.2% lower. In the currency markets, the euro recovered some of its poise after falling to a three-month low against the dollar during Asian trading hours. It was up 0.4% at 1.3018 dollars, having earlier fallen to a low of 1.2972 dollars.
Wall Street was also poised to open lower with Dow futures and the S&P 500 futures both 0.7% lower. Oil prices fell alongside equities, with the benchmark New York rate down 91 cents at 97.58 dollars a barrel.
Earlier in Asia, Japan's Nikkei 225 index plunged 2.8% to close at 9,119.14 - its lowest finish in three months - with the market's export sector also sapped by a rising yen. Hong Kong's Hang Seng slid 2.6% to 20,536.59. In other Asia markets, Australia's S&P/ASX 200 lost 2.2% to 4,301.30 and South Korea's Kospi shed 1.6% to 1,956.44.