European shares slumped on Tuesday after elections in Italy threatened a renewal of the euro-zone crisis, with bank-stocks taking the biggest cut.
Worries about a new flare-up in the euro zone's debt crisis seeped through the bank sector, whose lenders could be hit with new write-downs and bad debts if the region's economy weakens as a result of debt problems in countries such as Italy and Spain.
The big slide across Europe has started to impact Indian bourses. "Clearly, the market has broken some important levels especially the level of 5,840 that I had earlier estimated. Add to this the impact of the Railway Budget which has clearly indicated that there is nothing much for the industry to look forward to. So there is no trigger as such from this Budget," independent analyst Ambareesh Baliga told CNBC-TV18.
"With the slide in global markets, it is possible it could send Indian bourses into a tailspin. This would make me adopt a less optimistic outlook,"
The pan-European FTSEurofirst 300 index fell 1.2 percent to 1,151.76 points while the euro zone's blue-chip Euro STOXX 50 index slid 2.7 percent to 2,581.25 points.
Italy's benchmark FTSE MIB equity index was amongst the worst hit, slumping 4 percent, reflecting concern that its election result, which left no clear government, could hamper economic reforms and fuel its costs of borrowing.