Greece's stock market crashed on Tuesday and bond yields spiked after the country's government surprised investors by announcing a snap presidential vote.

The election was originally scheduled for the new year, but will now take place next week.

The news, announced late Monday, caused the Athens Stock Exchange to close down around 12.8 percent on Tuesday, and the yield on Greek 10-year government debt to rise to 8.158 percent.

Greece's banks were among the worst hit, with the National Bank of Greece closing down around 20 percent and Attica bank down 26 percent.

On Monday, euro zone finance ministers signaled that they were in favor of granting Greece a two-month extension to its bailout program, which Athens will ask for on Tuesday.

Read MoreGreece at odds withTroika as it submits budget

Prime Minister Antonis Samaras brought forward the election to select a new president after failing to win backing from Brussels over his 2015 budget. The first of three rounds of voting will be held on December 17.

A failure by Samaras to get his candidate elected for president—who has yet to be announced—could trigger early elections, Reuters reported Tuesday.