Italy vote uncertainty weighs on European shares

LONDON (REUTERS) - Uncertainty over the Italian election outcome dragged European indexes off their highs on concern that an unclear outcome could hamper the country's effort to implement economic reforms.

Italian shares and bonds lost earlier gains after election projections showed former prime minister Silvio Berlusconi's conservative bloc leading in the Senate, contradicting initial exit polls and raising the spectre of deadlock in parliament.

The pan-European FTSEurofirst 300 index provisionally closed up 0.1 per cent at 1,166.73 points, off a high of 1,174.24 points.

If no stable government is formed, voters could be forced to return to the polls, thereby fuelling short-term market volatility.