Asian shares fall after European election results
Asian markets have dropped on fears that the eurozone may rein in austerity measures that many see as key to solving the region's debt crisis.
Japan's Nikkei 225 index fell 2.8%, South Korea's Kospi shed 1.6% and Hong Kong's Hang Seng dropped 2.5%.
On Sunday, many French and Greek voters backed politicians opposed to current plans to cut state spending.
The worry now is that the eurozone's hard-fought fiscal compact, aimed at cutting debt levels, may fall apart.
"Investors are concerned on whether the eurozone fiscal compact will survive," Arjuna Mahanedran of HSBC Private Bank told the BBC. "That is key to solving the region's debt crisis."
On Sunday night, France elected a new President, the socialist Francois Hollande, who has said he wants Europe's economies to cut debt levels by focusing more on growth rather than austerity.Germany v France?
France and Germany have been at the heart of attempts to solve the eurozone debt crisis, and Mr Hollande's predecessor Nicolas Sarkozy worked very closely with German Chancellor Angeal Merkel on bailout plans and austerity measures.
End Quote Jeff Sica SICA Wealth Management
The Merkel-Hollande initiative will never materialise due to Hollande and Merkel being polar opposites with no chance to agree on anything”
They were the driving force behind the eurozone's fiscal compact.
However the election of Mr Hollande now brings that partnership into question, analysts said.
Mr Hollande has said that he will re-negotiate the pact that enforces greater financial discipline among eurozone economies, and has previously said that it was "not for Germany to decide the future of Europe".
Mrs Merkel by contrast has maintained that there will no renegotiation of the pact.
Analysts said that given the different approaches it may become difficult for eurozone members to agree on further measures required to solve the crisis.
"The Merkel-Hollande initiative will never materialise due to Hollande and Merkel being polar opposites with no chance to agree on anything," Jeff Sica, president of SICA Wealth Management.'Ticking time bomb'
In Greece, the country's governing parties, Pasok and New Democracy, lost their parliamentary majority after Sunday's election.
During the campaign, President Sarkozy warned that an Hollande presidency would take France on the road to Greece and indulge in a festival of spending.
The left-wing coalition Syriza, which has been against the government's austerity measures, emerged as the second-biggest party with more than 16% of the votes.
Analysts said the Greek result showed that voters were deeply unhappy with the emergency bail-out plans agreed between Greece, the European Union and the International Monetary Fund.
They said the new government may try and renegotiate some of the austerity measures, which include government spending cuts, state job losses and tax increases, in a bid to appease voters.
"The Greek side of things is a ticking time bomb," Justin Harper of IG Markets told the BBC.
"The fear now is that all the hard work that had gone into getting the second bailout package may start to unravel and we can expect some real pressure on stock markets in the coming days."Risk aversion
The declines in Asian markets were not just limited to stocks.Continue reading the main story
The euro fell to a three-month low of $1.2955 against the US dollar in Asian trade.
The price of oil also declined. Brent crude was down by 1% to $111.95 per barrel and light crude fell by 1.7% to $96.80 per barrel.
Analysts said investor sentiment was also dented by weaker-than-expected jobs data from the US on Friday, which showed that jobs growth in the world's biggest economy slowed during April.
"When you take the unknown of what is happening in Europe and combine it with the slowdown in the US jobs growth, that is pushing people away from riskier assets," said David Lennox of Fat Prophets.
"At the moment, given the political uncertainty in Europe, you have to count the euro as a risky asset," he added.