Italy is facing political paralysis as near-complete election results raise the possibility of no clear winner and a hung parliament.

The uncertainty bodes ill for the nation's efforts to pass the tough reforms it needs to snuff out its economic crisis and prevent a new round of global financial turmoil.

The chaotic election scenes in the eurozone's third-biggest economy quickly snaked around the world - sending the Dow Jones index plunging more than 200 points in its sharpest drop since November and causing Tokyo's red-hot benchmark index to sink nearly 2% at opening.

A major factor in the murky result was the astonishing vote haul of comic-turned-political leader Beppe Grillo, whose 5 Star Movement has capitalised on a wave of voter disgust with the ruling political class.

That has coupled with the surprise return as a political force of billionaire media mogul Silvio Berlusconi, who was driven from the premiership at the end of 2011.

Mr Berlusconi's alliance was neck-and-neck with centre-left leader Pier Luigi Bersani's coalition for both parliament's lower house and the senate.

The ballot was so close that final official results were not expected until later on Tuesday at the earliest.

The decisions Italy's government makes over the next several months promise to have a deep impact on whether Europe can decisively stem its financial crisis. Its problems can rattle market confidence in the whole bloc and analysts have worried it could fall back into old spending habits.

The unfolding uncertainty raised the possibility of new elections in the coming months, the worst possible outcome for markets that are looking to Italy to stay the course with painful but necessary reform.

While Italy's postwar history has largely been one of revolving-door governments, it has never seen a hung parliament. Experts said that was now likely to change.