European markets are braced for a sell off on Tuesday as Italy's election results could result in a political deadlock, causing economic chaos and further damage to the euro zone.
Pier Luigi Bersani's center-left coalition won a slim majority in the lower house but no party won enough seats to win a majority in the country's upper house, the Senate.
With deadlock in the Senate it will be harder to pass key legislation needed for economic reforms. The euro has fallen to almost a six-week low against the dollar on the news.
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The center-left coalition led by Bersani took 121 Senate seats while Berlusconi's center-right took 117 seats, according to Reuters. Comedian Beppe Grillo's protest party, the "5 Star Movement," has become the largest single party in the lower house, having gained a quarter of the vote.
Researchers at Citi said Italy's parliament had been "hung, drawn and quartered" by the election result.
"This result extends political risk in the euro zone," the Citi note said on Tuesday. "The high political uncertainty that is likely to persist in the coming period will likely have a negative impact on real and financial investment decisions in Italy."