Italy PM resigns after clear defeat

Italian Prime Minister Matteo Renzi prepared to hand in his resignation yesterday 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 yesterday 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.