Political uncertainty in Italy has slammed global stock markets as investors considered the possibility that Europe’s debt crisis may be about to rear its head again.

Italy’s indecisive election results is causing uncertainty over whether Italy’s next government can impose the tough austerity measures that markets demand. Former Prime Minister Silvio Berlusconi made a strong showing on an anti-austerity campaign.

A stable Italy is considered essential to the future of the euro.

Japan’s Nikkei index tumbled 2.2%, and Hong Kong’s Hang Seng index lost 1.3 %.

Europe is well down this morning. Germany’s DAX has lost almost two per cent  London’s FTSE is more than one per cent lower.