Wall Street struggled after Greece called for a new election following politicians' failure to form a government, even as American data provided good news on the US economy. The euro sank to a four-month low against the greenback.
While the date for the next Greek vote hasn't been announced, it appears likely to take place early next month. At this stage, it appears the leftist SYRIZA party, which is vehemently opposed to the terms of EU/IMF bailout, would win the largest number of seats.
Europe's Stoxx 600 Index closed with a 0.7 per cent drop for the day, while the euro shed 0.7 per cent to US$1.2739 at 2.19pm New York time.
"The Greeks and Germans seem to be playing an enormous game of chicken. It is unsettling to the market that those who would rather renegotiate the existing agreement seem to be gaining strength after the election," John Manley, chief equity strategist at Wells Fargo Funds Management in New York, told Reuters.
In late trading in New York, losses were accelerating. The Dow Jones Industrial Average fell 0.65 per cent, the Standard & Poor's shed 0.54 per cent and the Nasdaq Composite Index dropped 0.30 per cent.