Britain's FTSE takes hit from Italy poll deadlock

* FTSE 100 down 1.4 percent

* Italy election vote ends in hung parliament

* Vote potentially disrupts economic reform and Europe recovery

* Financials take most points off the FTSE 100

By David Brett

LONDON, Feb 26 (Reuters) - A tumble for bank shares dragged Britain's stock market sharply lower on Tuesday after election results threatened to leave Italy's economic reforms in tatters, reigniting concerns over the euro zone's debt crisis.

Europe's most indebted state faced a political vacuum after a huge protest vote left no party or likely coalition with enough seats to form a majority in the upper house.

By 0844 GMT, London's blue chip index was down 86.73 points, or 1.4 percent, at 6,268.64. The euro zone is Britain's biggest trade partner and crucial to its own hopes of an economic recovery.

"(This result) raises the prospect of an extended period of uncertainty," says Peel Hunt strategist Ian Williams.

"A more defensive approach seems more likely in the coming days. The recent moves in UK sector and style trends were already hinting at such a shift," he said.

Italy's ten year borrowing costs shot up, while the FTSE volatility index - a crude gauge of investor fear - soared 15 percent early on Tuesday, having gained 30 percent over the last month as concerns grew over the elections.

Financials were the top fallers taking 33 points off the index. They have been at the forefront of the FTSE's 6 percent rise so far this year and are most exposed to the euro zone crisis through corporate and public debt.

Commodity-related stocks tumbled too, taking a combined 24 points off London's blue chip index, as Italy's election results dented the outlook for the global economic recovery.

Consumer-related stocks also fell steeply with Britain's biggest hotel and coffee shop operator Whitbread, directly exposed to the broader economy and fortunes of the consumer, down 3.6 percent after the firm saw a slowdown in fourth-quarter sales.

"There was a slight disappointment in the weather affected restaurant business but the shares have fallen victim to the woes of the wider market," a London-based trader said.

Drugmaker AstraZeneca down 1.3 percent after it announced results from long-term safety trial of Naloxegol in patients with opioid-induced constipation.

BofA Merrill Lynch said it was keeping its "underperform" rating on AstraZeneca, awaiting more detailed efficacy and safety data from the two pivotal studies due towards the end of May.

"At this stage, we remain cautious given headline data published last year was mixed on efficacy (one Phase III study missed primary endpoint at one dose) and prior Phase II safety data suggests an undifferentiated profile vs competitors," it said.

There were just three risers on the FTSE 100. British specialty chemical maker Croda International massively outperformed, rising 3 percent after it reported a 6.6 percent rise in full-year profit.

Fresnillo and Randgold Resources, each barely in positive territory, were the other two gainers as investors turned to the two precious metal mining stocks as a proxy for safe haven gold. (Written by David Brett)