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Hong Kong: Asian markets mostly fell on Tuesday, with dealers spooked by an election in Italy that left no clear winner, leading to political uncertainty and fresh fears about the euro zone stability.

The dollar and the euro clawed back some of the losses suffered in the US trade as investors absorbed the Italian results, while there was also concern about the lack of progress in Washington to avoid spending cuts due to take effect Friday.

Tokyo tumbled 2.26%, or 263.71 points, to 11,398.81, with profit-takers moving in after the index enjoyed a big surge on Monday.

Sydney shed 1.03%, or 52.2 points, to 5,003.6, and Seoul lost 0.47%, or 9.51 points, to close at 2,000.01.

Shanghai tumbled 1.40%, or 32.48 points, to 2,293.34, while Hong Kong fell 1.32%, or 300.39 points, to 22,519.69.

In early trade in Europe Milan fell 5% before gaining back a little ground, while there were also big losses in London, Frankfurt, Paris and Madrid.

Italy on Tuesday looked headed for political deadlock as results from Sunday’s election indicated there would be no clear winner, while the biggest gainer was a protest party run by a popular comedian.

The polls show that while the leftists won the lower house, the party run by former Prime Minister Silvio Berlusconi had more seats in the upper house.

Investors fear the outcome will lead to political stalemate in the country and a possible return to the dark days of the region’s financial crisis if austerity measures introduced to cut Rome’s huge debt pile are reversed.

The developments in Italy sent a shiver through forex markets in New York, with the euro tumbling to $1.3065 and 120.12 yen.

But in early European trade the single currency edged up to $1.3087 and 120.44 yen, although still well down from the $1.3197 and 124.24 yen in Tokyo on Monday.

The dollar fetched 92.00 yen against 91.92 yen in New York, but far off the 94.77 yen high seen Monday in Asia.

The split vote in Italy wiped out the yen’s Monday losses that were fuelled by reports Japan’s government is likely to nominate a man to run the central bank who is in favour of more aggressive monetary easing.

On Wall Street, the Dow tumbled 1.55% in its biggest single-day drop since November, while the S&P 500 dived 1.83% and the Nasdaq sank 1.44%.

Traders are also keeping an eye on US lawmakers to see if they can muster an agreement to avoid the imposition of $85 billion in budget cuts—known as the sequester—that will come in on Friday.

Analysts have warned that if less drastic cuts are not agreed, the still-fragile economy could slip back into recession.

Oil prices fell, with New York’s main contract, light sweet crude for delivery in April, dropping 85 cents to $92.26 a barrel in the afternoon and Brent North Sea crude for delivery in April shedding 85 cents to $113.59.

Gold was at $1,597.80 at 1030 GMT compared with $1,593.30 late Monday.

In other markets:

—Singapore fell 1.05%, or 34.50 points, to close at 3,254.26.

United Overseas Bank shed 2.19% to Sg$19.22 and Singapore Airlines dipped 0.73% to Sg$10.85.

—Taipei fell 0.84%, or 66.78 points, to 7,880.9.

Taiwan Semiconductor Manufacturing Co shed 1.43% to Tw$103.5 while leading smartphone maker HTC was 0.36% higher at Tw$276.5.

—Manila closed 1.35% lower, giving up 90.66 points to 6,630.67.

SM Investments shed 1.37% to 1,010 pesos and Ayala Corp. fell 1.02% to 584 pesos, while SM Prime Holdings slid 1.60% to 18.50 pesos.

—Wellington closed 0.30%, or 12.47 points, higher at 4,238.92.

Telecom rose 1.1% to NZ$2.32, Sky City added 0.5% to NZ$4.10 and Air New Zealand was up 4.7% at NZ$1.33.

—Jakarta ended down 0.70%, or 33.08 points, at 4,663.03.

Asia Pacific Fibres lost 0.53% to 188 rupiah, Inda Kiat Pulp & Paper dropped 3.23% to 900 rupiah, and Indofood Sukses Makmur gained 0.73% to 6,900 rupiah.

—Bangkok lost 0.64%, or 9.81 points, to 1,530.32.

Oil company PTT dropped 1.43% to 344.00 baht, while Airports of Thailand added 1.31% to 116.00 baht.

—Kuala Lumpur fell 0.19%, or 3.17 points, to close at 1,624.18.

Felda Global Ventures lost 0.9% to 4.44 ringgit, while IOI Corp shed 1.8% to 4.93 ringgit. Telekom Malaysia gained 0.2% to 5.33 ringgit.

—Mumbai slid 1.64%, or 316.55 points, to a three-month low of 19,015.14.

India’s private carrier Jet Airways (India) Ltd plunged 11.12% to 448.45 while motorcycle maker Bajaj Auto Ltd fell 4.20% to 1,921.9. AFP

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