Milan's main stock exchange plunges by 4.5% on uncertainty
Concerns over Italy's economic future weighs on financial market04 February, 19:01
Investors appeared concerned over a rise in popularity for Berlusconi, who says that he intends to undo many of the fiscal austerity reforms put in place by the technocratic government of Premier Mario Monti.
Berlusconi also plans to refund a tax on primary residences - the much-maligned IMU imposed by Monti, who is also seeking election when Italians go the polls on February 24 and 25.
Financial markets have applauded Monti's reforms as helping the country's economy through crisis while reducing interest rates and cutting spending.
Bank shares were also weak Monday as investors continued to digest the implications of the scandals plaguing Monte dei Paschi di Siena (MPS), Italy's third-largest bank.
Shares in MPS lost 4.83% in Monday's trading after prosecutors called on Giuseppe Mussari, ex-chairman of the troubled bank, to answer questions about alleged fraud at MPS.
The bank was thrown into crisis in January when it emerged that a shady series of derivative and structured-finance deals produced losses of 720 million euros. There have also been reports of bribes and corruption by bank officials regarding, among other things, the nine-billion-euro acquisition of rival Antonveneta in 2008. Meanwhile, other European markets were roiled by a corruption scandal that threatens Spanish Premier Mariano Rajoy.
Opposition leaders called for Rajoy to resign as one opinion poll showed his centre-right political party at its lowest point on record.
In Frankfurt, the DAX lost 2.5% to reach 7,638.23 points, while London's FTSE 100 lost 1.58% to close at 6,246.84 points, Paris's CAC 40 ended the day lower, falling 3.01% to 3,659.91 points, and Spain's IBEX 35 closed trading 3.77% lower at 7,919.60 points.