European jitters as Italy’s Renzi quits

AFP, ROME: Italian Prime Minister Matteo Renzi prepared to hand in his resignation Monday after suffering a ruinous referendum defeat that has sparked fresh jitters about the fate of a united Europe.
“My experience of government finishes here,” said a downcast Renzi after acknowledging a defeat of almost 60-40 percent over his constitutional reform bid, which cast a shadow over the short- and long-term future of the eurozone’s third-largest economy.
Renzi, 41, was due to meet President Sergio Mattarella later Monday to hand in his resignation formally after a final cabinet meeting.
Mattarella will then be charged with brokering the appointment of a new government or, if he is unable to do that, ordering early elections. The euro briefly sank to a 20-month low and most Asian stocks also retreated as investors fretted over the effect the political instability could have on a long-running banking crisis, and the possibility of an early election that could usher anti-EU parties into power.
Italy’s FTSE MIB stock index tumbled 2.0 percent at the opening before clawing back some ground, underperforming other European markets. Italian bond yields also rose slightly, reflecting investor nervousness.
However, traders were reassured in part by the result of Europe’s other crucial vote this weekend, which saw Austria reject a populist, far-right candidate for president.
“The next steps are far from clear for Italy and traders are not panicking yet”, said Craig Erlam, senior market analyst at Oanda.
Some analysts said the referendum could come to be seen as a landmark moment.
Holger Schmieding, at the Berenberg private bank, said the risk that Italy could choose to leave the euro, while still remote, had increased.
Capital Economics said: “Italy has taken the first step along a path that could lead it out of the eurozone.” Populists in Italy and throughout Europe rejoiced at Renzi’s downfall, with the founder of the anti-establishment Five Star movement Beppe Grillo calling for an election “within a week”. Grillo said a snap election should be held on the basis of a recently adopted electoral law designed to ensure the leading party has a parliamentary majority—a position the populist movement could find itself in at the next election.

 

European jitters as Italys Renzi quits

AFP, ROME: Italian Prime Minister Matteo Renzi prepared to hand in his resignation Monday after suffering a ruinous referendum defeat that has sparked fresh jitters about the fate of a united Europe. My experience of government finishes here, said a downcast Renzi after acknowledging a defeat of almost 60-40 percent over his constitutional reform bid, which cast a shadow over the short- and long-term future of the eurozones third-largest economy. Renzi, 41, was due to meet President Sergio Mattarella later Monday to hand in his resignation formally after a final cabinet meeting. Mattarella will then be charged with brokering the appointment of a new government or, if he is unable to do that, ordering early elections. The euro briefly sank to a 20-month low and most Asian stocks also retreated as investors fretted over the effect the political instability could have on a long-running banking crisis, and the possibility of an early election that could usher anti-EU parties into power. Italys FTSE MIB stock index tumbled 2.0 percent at the opening before clawing back some ground, underperforming other European markets. Italian bond yields also rose slightly, reflecting investor nervousness. However, traders were reassured in part by the result of Europes other crucial vote this weekend, which saw Austria reject a populist, far-right candidate for president. The next steps are far from clear for Italy and traders are not panicking yet, said Craig Erlam, senior market analyst at Oanda. Some analysts said the referendum could come to be seen as a landmark moment. Holger Schmieding, at the Berenberg private bank, said the risk that Italy could choose to leave the euro, while still remote, had increased. Capital Economics said: Italy has taken the first step along a path that could lead it out of the eurozone. Populists in Italy and throughout Europe rejoiced at Renzis downfall, with the founder of the anti-establishment Five Star movement Beppe Grillo calling for an election within a week. Grillo said a snap election should be held on the basis of a recently adopted electoral law designed to ensure the leading party has a parliamentary majoritya position the populist movement could find itself in at the next election.