On Tuesday European stocks fell for a second day as Italy’s premier in waiting Mario Monti struggled to get political parties to help form his new Cabinet and the country’s biggest defense company forecast an unexpected loss. Asian shares and US index futures also dropped.

The benchmark Stoxx 600 fell 1.2% during morning trading in London.

Monti, a former European Union competition commissioner, struggled to get political parties to agree to participate in his so-called technical Cabinet during talks in Rome on Monday. A government lacking political representation will find it harder to muster support from the parties in parliament to pass unpopular laws. Monti said he’ll conclude his talks during the day.

The euro area’s inability to contain its sovereign-debt crisis led to a surge in Italian borrowing costs as investors bet on which nation will need aid next. Monti will try to reassure investors that Italy can cut its €1.9 trillion debt and spur economic growth that has lagged behind the euro-region average for more than a decade.

European stocks slid even as a government report said gross domestic product in Germany, Europe’s largest economy, rose 0.5% from the second quarter, when it increased 0.3%. France, the euro area’s second-biggest economy, expanded 0.4% after contracting 0.1% in the previous period. The euro area’s gross domestic product increased 0.2% from the previous three months, the European Union’s statistics office in Luxembourg said.

Japan’s Nikkei 225 Stock Average fell for the first time in three days as Italian borrowing costs surged, reigniting concern Europe’s debt crisis is spreading and damping the earnings outlook for Asian exporters. Turnover on the Tokyo Stock Exchange was the lowest this year.