Stock markets across Europe rattled by Italy crisis

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European stocks fell for a second day as uncertainties over the make-up of Italy’s new government deepened.

Italy’s main stock index extended early losses to sink to a 10-month low, falling by 3% on Tuesday.

Bank shares were also down, slumping by almost 5% to a 13-month low, bruised by a sell-off in Italian government bonds, a significant part of the banks’ portfolios.

Intesa Sanpaolo, BPER Banca, Unicredit and UBI Banca fell sharply, down by 4.4% to 5.8%, while Poste Italiane also tumbled 5.7%.

Italy’s bond market also suffered a steep sell-off. The yield on 10-year debt hit 3.133% – a level not seen since 2014.

A rise in bond yields means the Italian government is paying more interest on its debt.



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The FTSE 100 fell by 1.1% to its lowest level in almost three weeks as it resumed trading after the bank holiday weekend, and banks RBS and Barclays were among the biggest fallers with shares tumbling by 3%.

The stress in Italy also spread to other eurozone markets, with Portuguese stocks sliding by 2.7%,

In Spain, which is in the throes of its own political crisis as Prime Minister Mariano Rajoy faces a no-confidence vote later this week, stocks fell by 2.9%.



A man stands to look electoral posters in Pomigliano D'Arco, near Naples, Italy, February 21, 2018 Stock markets across Europe rattled by Italy crisis Stock markets across Europe rattled by Italy crisis skynews pomigliano darco naples 4247066




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Banco Santander, the eurozone’s biggest bank by market capitalisation, fell by 5% and BBVA by 3%.

Italy has been without a government since inconclusive elections on 4 March, at which voters flocked to anti-establishment and far-right parties the Five Star Movement and League Nord to leave a hung parliament.

Carlo Cottarelli, a former International Monetary Fund official, has accepted a mandate to form a technocratic and politically “neutral” government, but has admitted Italians could face a snap poll if he does not win parliamentary support for his interim administration.

Investors fear there is a risk of the eurozone breaking up as fresh elections might give the two populist parties a more eurosceptic mandate.

Renewed concerns caused the Frankfurt-based Sentix research group’s eurozone break-up index to climb to its highest level since April 2017, when investors feared a eurosceptic Le Pen presidency in France.

The pan-European STOXX 600 fell by 1.6% – with banks the worst-performing, while the eurozone’s banks index tumbled by 4.3% and was on track for its biggest monthly drop since the Brexit vote in June 2016.



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