World stocks dived on Wednesday after a failure by Greece’s political leaders to form a coalition government set the stage for new elections next month, keeping Europe’s debt crisis centre stage.

The turmoil in Greece sent European shares lower in early trading. Britain’s FTSE 100 fell 0.9 per cent to 5,388.93 and Germany’s DAX slid 1 per cent to 6,335.93. France’s CAC-40 was down 0.4 per cent at 2,036.30.

Wall Street was also headed for a lower opening, with Dow Jones industrial futures losing 0.1 per cent to 12,589. S&P 500 futures were 0.2 per cent down at 1,325.90.

Asian benchmarks recorded sharp losses earlier in the day.

Japan’s Nikkei 225 index dropped 1.1 per cent to close at 8,801.17, its lowest close since January 30, 2012 amid discouraging economic news. Core private-sector machinery orders fell 2.8 per cent in March, the first drop in three months, Japan’s Cabinet Office said.

Newly elected Greek leaders hotly divided over how to resolve the country’s economic crisis failed on Tuesday to form a new government. That means new elections must be held in June.

Some investors fear a win by parties that oppose unpopular austerity measures necessary for Greece to qualify for urgently needed bailout money. Without the money, the country would likely default on its debt and leave the euro common currency.

“The Greek crisis will continue to frustrate markets, keeping sentiment under pressure,” analysts at Credit Agricole CIB in Hong Kong wrote in an email.

Mainland Chinese shares also lost ground, with the benchmark Shanghai Composite Index falling 1.2 per cent to 2,346.19. The Shenzhen Composite Index dropped 1.4 per cent to 942.04. Shares in real estate, cement producers, furniture makers and financial companies weakened.

Elsewhere, blue-chip shares across sectors throughout Asia registered sharp losses. South Korean electronics giant Samsung Electronics plunged 6.2 per cent and Hyundai Motors shed 4 per cent. In Japan, Toyota Motor lost 2.1 per cent. Nomura Holdings lost 1.5 per cent.

Shares of major Chinese shipping companies plummeted amid fears of weakness in Europe, a critical export market. Hong Kong-isted China Shipping Container Lines sank 5.2 per cent. China COSCO Holdings dropped 3.7 per cent.

“The Chinese shipping sector is down sharply and continues to downtrend,” said Linus Yip, a strategist at First Shanghai Securities in Hong Kong. “The market is not good right now, but I expect a technical rebound is coming.”

Falling commodities prices hurt Australia’s mining sector. BHP Billiton, the world’s largest mining company, lost 4.1 per cent. Rio Tinto was down 3.9 per cent. Paladin Energy tumbled 9.3 per cent.

Benchmark oil fell $1.56 to $92.42 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell 80 cents on sday to finish at $93.98 per barrel in New York oil hasn’t finished that low since Dec. 19.

In currencies, the euro fell to $1.2716 from $1.2734 late Tuesday in New York. The dollar rose to 80.36 yen from 80.27 yen.

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