While the centre-left coalition led by Pier Luigi Bersani won the lower house, the party did not gain a majority vote in the upper house necessary for an overall victory.
Meanwhile, the Five Star protest movement of comedian Beppe Grillo emerged as the strongest party in the country and Silvio Berlusconi’s centre right bloc threatened to challenge the close tally.
The result will see the country face a political stalemate as competing parties attempt to form a functioning government.
As the results of the election appeared to offer no end to the eurozone crisis, investors were quick to sell off their European holdings.
The euro also fell to an almost seven-week low against the dollar to $1.3042 in Asian trading on Tuesday; its lowest point since January.
However, the FTSE shrugged off Moody’s downgrade to finish yesterday’s trading 1.01% higher at 6,355.
