European shares were expected to open lower as voters in France and Greece both reacted to austerity measures in their countries by kicking out incumbent governments in elections over the weekend.
Risk assets fell broadly on Monday as the elections fueled questions about commitments from struggling euro zone economies to pursue austerity measures, widely seen by markets as crucial to resolving the bloc's debt crisis. MSCI's broadest index of Asia-Pacific shares outside Japan shed 1.9 percent while Japan's Nikkei stock average slid 2.5 percent. U.S. stock futures were down 1.1 percent.
The CAC 40 was set to open 68 points lower at 3094 while Germany’s DAX was seen opening 161 points lower at 6400. The UK is closed on Monday for its May Day public holiday.
Greece's ruling coalition, the conservative New Democracy party and Socialist rival PASOK, failed to win a majority in parliament, results of 96 percent of the vote in Sunday's general election showed.
The results showed the two pro-bailout parties, mauled by angry voters, won only 150 out of 300 seats in parliament. New Democracy party was leading with about 19 percent of the vote.
PASOK was in third place, trailing the anti-bailout Left Coalition party, and suffering the worst defeat in its history.
In France, victorious Francois Hollande faces a short honeymoon after his election as the country’s first left-wing president in 17 years, with financial markets eager for clear signals on his policies and how hard he plans to push back against German-led austerity.
The moderate Socialist beat conservative Nicolas Sarkozy with 51.7 percent of Sunday's runoff vote, after a bruising campaign dominated by the same anger over the economic crisis that has felled 10 other European leaders since late 2009.
"There is a lot of joy and pride but also apprehension at taking on this responsibility at a difficult time for the country and for Europe," Hollande said.
After delivering a victory speech in his rural base of Tulle in central France, he flew to Paris and addressed tens of thousands of supporters in historic Bastille square. The new president is expected to be sworn in on May 15. As fears about the euro zone's debt crisis resurface following an inconclusive election in Greece, Hollande will travel to Berlin to challenge Germany's focus on austerity policies and press new ideas for stimulating growth.
German Chancellor Angela Merkel joined other European leaders in congratulating Hollande on his election victory, said she was sure the two would work closely together.
Foreign leaders in Berlin, London and Washington who had backed Sarkozy and declined requests to meet Hollande before the election lined up to welcome him to their club.
U.S. President Barack Obama was the first leader from outside Europe to call with congratulations. The White House said he looked forward to working with Hollande on "shared economic and security challenges."
Meanwhile Angela Merkel's conservatives were in danger of being ousted from power in another German state on Sunday after the opposition Social Democrats (SPD) said they wanted to form a three-way coalition with two smaller centre-left parties.
The Christian Democrats' (CDU) vote fell to 31 percent, their worst result in the state since 1950, but they were still just the largest party in the rural region, a projection by Germany's ARD TV network showed.
In Italy, voters will deliver their first verdict on prime minister Mario Monti on Monday in local elections that are expected to underscore the growing resistance to austerity policies across Europe.
In Spain, the county’s central bank is planning an injection of state funds into Spanish lender Bankia through bonds convertible into shares, and which will be paid back by the bank at an interest rate close to 8 percent, according to a reports in El Pais on Monday.
In corporate news, BAE Systems is close to sealing a 500 million pounds ($808 million) deal to sell up to 30 Hawk trainer aircraft to Saudi Arabia, according to a Sunday Times report. The sale would provide some welcome relief for the arms maker, which is battling against shrinking defense budgets in Europe and America. Saudi Arabia has ordered 72 Eurofighter Typhoon jets from BAE and needs the Hawks to train its pilots.
Meanwhile, Spanish construction and infrastructure company Ferrovial SA is in talks with London-listed investment manager 3i Group to acquire the latter's support services company Enterprise, the Financial Times reported on its website Sunday, citing sources close to the situation. 3i declined to comment on the report.
The FT also reported that plans to bolster shareholder powers over boardroom pay will be given centre stage in the Queen's Speech, as highly paid executives face another week of lambasting from shareholders.