The euro has slumped to a three-month low and shares on European markets have fallen after the parliamentary vote in Greece saw the country's two governing pro-austerity parties lose their majority.
The New Democracy Party and Socialist PASOK party together took only 32 percent of the vote -- throwing the country into fresh political uncertainty.
Analysts say the result has raised concerns about the future of Greece's international financial bailout and the viability of the government's austerity measures.
Greece has secured two bailouts of 240 billion euros in exchange for promises of big austerity cuts that have already seen pensions and salaries slashed by up to 40 percent.
Greek stocks plunged 7.7 percent a day after the results of the vote were announced on May 6, while the euro fell to its lowest level since January on world markets.
The presidential election in France, which saw Socialist Francois Hollande oust President Nicolas Sarkozy, has fuelled further anxiety about the fate of austerity measures designed to end the eurozone's debt crisis.
Hollande's anti-austerity, pro-growth platform has many in the EU watching to see how he might push back against a German-led austerity drive.
In Greece, New Democracy leader Antonis Samaras, whose party came first in the polls, said on May 7 that his efforts to form a national salvation administration had failed, as he did not manage to entice parties opposed to the country's EU-IMF bailout deal to join a coalition.
Samaras's failure means that leftist Syriza party -- which came second in the election and which opposes the bailout -- would now be tasked with forming a government.
Samaras was rebuffed by Syriza party and the small Democratic Left group, while the nationalist Independent Greeks and the Communist Party refused even to meet with
The third-placed socialist Pasok party, formerly in a coalition with New Democracy, agreed to cooperate but only if the leftists also joined.
Syriza leader Alexis Tsipras will be summoned by President Carolos Papoulias on May 9 and given three days to form a government. Tsipras has said he would seek to form a left-wing coalition to reject the loan agreement's "barbaric" measures.
The country, in its fifth year of recession with unemployment at 20 percent, has until June to come up with another 11.5 billion euros ($15 billion) in savings over the next two years.
Analysts say a repeat election now looks more likely than a coalition government.
With reporting by Reuters, AFP, AP, and dpa