The euro retreated 0.3% in the early morning trading hours at Asia on Sunday, after his party New People’s Front her of France emerged victorious in the country’s parliamentary elections.

The French stocks they retreated 0.4%as no party secured independence and the country now faces the prospect of difficult negotiations to form a government, as the rise of the left wing blocked Marine Le Pen’s bid to bring the far-right to power.

The pan-European index STOXX 600 fell 0.1% at 10:11 Greek time, after losses in energy stocks followed the course of oil prices.

Political developments in France are creating new uncertainty in markets and setting the stage for further volatility going forward, financial analysts told Reuters.

“It looks like the anti-far-right parties have really got a lot of support,” said Simon Harvey, head of currency analysis at Monex Europe.

“But fundamentally from a market perspective, there is no difference in terms of the outcome. There will really be a gap in France’s legislative capacity,” he added.

Stocks and bonds fall – Concern about France’s finances

French stocks and bond futures fell on concerns that the surprise victory of the left-wing coalition in France will lead to policies that will strain the country’s already strained finances.

The index CAC 40 moves downwards. French bond futures fell, suggesting the 10-year bond yield spread over Germany’s would widen by about three basis points when markets open.

The Left’s success brought to the fore its campaign to sharply increase government spending. That would exacerbate fears about France’s balance sheet and put the state on a collision course with the European Union, which is already taking steps to curb the budget deficit.