ROME (AP) — Italy emerged from elections Tuesday with no clear winner, driving markets around the world markedly lower as investors worried that one of Europe's biggest economies would be unable to build a governing coalition that can stay the course on unpopular austerity measures.
A day after polling ended, a few seats in Parliament based on Italians' voting abroad still remained to be decided, but their numbers won't ease the gridlock. European leaders pleaded with politicians in Italy to quickly form a government to continue to enact reforms to lower Italy's critically high debt and spare Europe another spike in its four-year financial crisis.
If Italian parties fail to form a governing coalition, new elections would be required, causing more uncertainty and a leadership vacuum.
"What is now decisive for Italy — but, because Italy is such an important country for Europe, also for the whole of Europe — is that a stable government that is capable of acting can be formed as quickly as possible," German Foreign Minister Guido Westerwelle told reporters in Berlin.
The results of the election are a rejection of the tough austerity approach of the previous technocratic government led by Mario Monti. A center-left coalition led by Pier Luigi Bersani appears to have won a narrow victory in the lower house of parliament, while the Senate looks split with no party in control.
Italy's FTSE MIB index fell nearly 800 points, or 5 percent, to 15,552 Tuesday. Some of its banking stocks were briefly suspended after precipitous falls at the bell.
The interest rate on the country's benchmark 10-year bond — an important gauge of investor sentiment — rose by 0.39 percentage points to 4.83 percent. Investors sought protection in the bonds of more stable and prosperous economies, such as German government bonds.
Whether Tuesday's negative market reaction extends further into the week may hinge on how quickly a solution is reached in Italy. Despite the uncertainty, Italy's Treasury managed to sell €8.75 billion ($11.75 billion) of short-term debt though at a higher cost.
Silvio Berlusconi, the former Italian premier whose center-right coalition did better than expected, insisted that a government can be formed and called on Italians to ignore the "crazy markets." Berlusconi is a key player as his coalition is now the second-biggest bloc in the upper chamber.
"Markets go their own way. They are independent and also a little crazy," he said, adding that a government can be cobbled together if rival politicians are willing to "make some sacrifices."
Stinging from a loss of some 4 million votes compared to the last election in 2008, Bersani hasn't yet identified potential coalition partners. But top officials in his Democratic Left (PD) party were quick to rule out any deal with Berlusconi.
"As far as I go, absolutely not," Stefano Fassina, a PD official said of a possible Bersani-Berlusconi alliance.
A big surprise in the election was the strong showing by comic-turned-political leader Beppe Grillo, whose 5 Star Movement capitalized on a wave of voter disgust with the ruling political class. Grillo's bloc of seats in Parliament could prove crucial in making any coalition government viable.
But Grillo, swarmed by reporters outside his villa in Genoa, said his forces would seek to thwart any Bersani-Berlusconi deal. Raising the specter of early elections, he predicted any such coalition will "last seven, eight months. The economy won't let them escape."
Bersani himself later made subtle overture toward Grillo's forces, conceding that the center-left campaign had not gone deep enough for change.
"We finished first, without winning," he conceded. Bersani said he not opening talks with any potential partners until he submits his program to Italy's president, who taps a candidate to form a government.
Investors around the world appeared skeptical over the prospects of a deal.
"Clearly markets are taking fright from the messy and chaotic Italian election result," said Louise Cooper, financial analyst at CooperCity.
In Europe, Germany's DAX was down 176 points, or 2.3 percent, to 7,597 while the CAC-40 in France fell 99 points, or 2.67 percent, to 3,621. The FTSE 100 index of leading British shares slipped 84 points, or 1.3 percent, to 6,270.
Italy is hugely important for the future of the euro, and its apparent stability over the past six months has been one of the reasons that concerns over the currency have eased. Of the 17 European Union countries that use the euro, Italy has the second-highest debt burden as a proportion of its gross domestic product, at 127 percent. Only Greece's is higher. Italy has to spend around €80 billion a year just to service its debt. Continued...