Athens's ATG index fell 3.2 percent, led lower by banks such as Piraeus Bank, down 17.6 percent, and Alpha Bank, down 11.6 percent, as investors fretted about a possible stand-off with Greece's EU/IMF lenders.
Greek shares briefly turned positive in volatile trade before turning lower again, after leftwing leader Alexis Tsipras struck a deal to form a government with a right-wing party that also opposes the terms of Greece's 240 million euro (180 million pounds) bailout.
Syriza has promised an end to years of painful austerity and said it wants Greece's debts restructured, which could put Athens on a collision course with euro zone partners and threaten its continued membership of the single currency.
"There's a lot of uncertainty in the markets at the moment with regard to Greece. While it has formed a coalition, we don't really know how effective their agenda of debt renegotiation will be," Coutts global equity strategist James Butterfill said.
Butterfill said that while the quick formation of a new government was welcome, there was still uncertainty over Greece's continued membership of the euro, even though Syriza has said it intends to work with creditors on a new deal.
"Wealthy individuals may take money out of Greek banks and move them into other euro zone banks, where they feel protected against the Greek exit worry," he added.
Across Europe, euro zone shares were supported by the ECB's new stimulus measures to revive the euro zone's economy.
The pan-European FTSEurofirst 300 index was up 0.2 percent at 1,482.00 points at 1521 GMT, close to seven-year highs, with German and French benchmarks in positive territory.
Southern European markets recovered from early falls, with Italy's MIB index, Portugal's PSI 20 and Spain's IBEX all 0.6 percent to 1.1 percent higher.
Investors said the move by the ECB to buy government bonds added to the appeal of European equities, with markets much more insulated from turmoil in Greece than they were in 2012, at the peak of the sovereign debt crisis.
"The aftermath of the Greek elections is likely to keep volatility elevated, but in our view the factor which will end up as the dominant one is the turn in euro zone’s activity momentum," analysts at JP Morgan wrote in a note.
"The turn in euro zone’s macro momentum is happening right at the time when ECB is starting to act more aggressively ... we would recommend using any dips as opportunities to buy."
International Consolidated Airlines Group (IAG) rose 4.8 percent after Aer Lingus said it was considering an improved 1.36 billion euro takeover proposal from the owner of British Airways.
It is the third attempt by IAG to buy its Irish rival, which traders said makes strategic sense for the airline. Aer Lingus rose 1.3 percent.
(Editing by Catherine Evans)
By Alistair Smout