European stocks tumble on Italian political woes; Dax down 1.75%

Investing.com - European stocks were sharply lower on Tuesday, as market sentiment weakened broadly after the outcome of the Italian parliamentary election sparked fresh concerns over political instability in the country.

During European morning trade, the EURO STOXX 50 plunged 2.48%, France’s CAC 40 plummeted 2.08%, while Germany’s DAX 30 retreated 1.75%.

Italy’s center-left party led by the Democratic Party's Pier Luigi Bersani won the majority of votes in the lower house, the chamber of deputies, and was likely to receive the mandate to form a government.

However, projections indicated that no party would be able to form a majority in the upper house or Senate, which could send Italy back to the polls.

Financial stocks were broadly lower, as French lenders BNP Paribas and Societe Generale plummeted 4.10% and 4.19%, while Germany's Deutsche Bank and Commerzbank plunged 3.70% and 3.04%.

Peripheral lenders added to losses, with Spanish banks Banco Santander and BBVA tumbling 3.56% and 3.70%, while Italy's Unicredit and Intesa Sanpaolo dove 6.83% and 7.82% respectively.

Elsewhere, SEB plunged 5.02% after saying full-year net income was EUR194.2 million last year, missing the average analyst estimate for EUR206.6 million.

Germany-based BASF also trended lower, plunging 3.07%, after saying earnings increased 18% to EUR1.8 billion in the fourth quarter, missing analysts' estimate of EUR1.83 billion.

In London, FTSE 100 tumbled 1.33%, as U.K. lenders tracked their European counterparts sharply lower.

Shares in HSBC Holdings plummeted 2.14% and Lloyds Banking declined 2.49%, while the Royal Bank of Scotland and Barclays retreated 3.03% and 4.42% respectively.

Meanwhile, mining stocks were mixed as Rio Tinto and BHP Billiton fell 0.29% and 1.26%, while Rangold Resources and Fresnillo advanced 0.78% and 0.77%.

Copper producers were also mixed, with Xstrata climbing 0.46% and Kazakhmys tumbling 2.05%.

In the U.S., equity markets pointed to a higher open. The Dow Jones Industrial Average futures pointed to a 0.34% gain, S&P 500 futures signaled a 0.36% increase, while the Nasdaq 100 futures indicated a 0.28% rise.

Market participants were looking ahead to congressional testimony from Federal Reserve chief Ben Bernanke later in the trading day, after last week’s minutes of the central bank’s January meeting showed that some policymakers favored an early end to the Fed's monetary easing measures.