By Carla Mozee, MarketWatch

LONDON (MarketWatch) -- European stocks fell Tuesday, with political uncertainty from embattled Greece and a drop in consumer prices in Spain weighing on sentiment during the last full trading day of 2014.

Greek stocks as tracked on the Athex Composite pulled back 0.6%, adding to Monday's fall of 3.9%, which came as after Prime Minister Antonis Samaras's presidential candidate, Stavros Dimas, failed to win backing from parliament. With a snap national election on deck, there are worries that a win by the far-left Syriza party will derail Greece's bailout program and austerity measures.

The Greek snap election will likely take place on Jan. 25, "meaning we have a good three weeks of uncertainty ahead of us. Headline risk will be the dominant theme and any changes in poll numbers are likely to drive price action," wrote Stan Shamu, market strategist at IG, in a Tuesday note.

Uncertainty is a factor "that the region certainly doesn't need at the moment and instead of officials solely needing to focus on ways to stimulate the economy, they now also have to monitor Greece," he said. See: Five things to know about the snap Greek elections

The European Central Bank has been grappling with stagnating growth and stubbornly low levels of inflation in the eurozone. On Tuesday, Spain's INE statistics agency said its flash estimate of December growth in consumer prices came in at negative 1.1%, compared with negative 0.4% in November. The decline stemmed largely from a fall in prices for gas and diesel oil. Spain's IBEX 35 index dropped 0.6% to 10,330.90.

Oil prices fell to fresh five-year lows on Tuesday ahead of the release of weekly U.S. oil inventory data. Oversupply concerns have contributed a roughly 50% fall in oil prices since June. On Tuesday, February Brent crude lost more than 1%, trading barely above $57 a barrel. U.S. crude futures for February delivery (CLG5) also lost more than 1%, trading below $53 a barrel.

Energy shares on the Stoxx Europe 600 declined by a collective 1.6%. Subsea 7 SA , a Norwegian seabed-to-surface engineering contractor, led losses on the Stoxx 600 as its shares fell 3.7%, and Norwegian oil-services company Seadrill Ltd. moved 2.9% lower. Among oil producers, Premier Oil PLC dropped 2.7%, and Portugal's Galp Energia SGPS SA gave up 2.3%.

The Stoxx Europe 600 fell 0.4% to 342.77.

Tuesday is the last full trading day in Germany and Italy ahead of New Year holidays. The DAX 30 fell 0.7% to 9,861.68, while the FTSE MIB turned higher by 0.1% to 19,146.80.

The German benchmark is headed for a 3.2% rise for the year, a small advance compared with a 25% rise in 2013 and a 29% advance in 2012. The FTSE MIB is on track for a yearly rise of 0.9%.

In the U.K., the FTSE 100 fell 0.6% to 6,595.95, while France's CAC 40 was down 0.7% at 4,290.06.

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