Italian Prime Minister Matteo Renzi is resigning after losing a key referendum on constitutional reform.

The result plunges the country into political turmoil, but with the European Union already reeling from multiple crises and struggling to overcome anti-establishment forces, many sought to downplay the broader significance of the vote.

EU finance commissioner Pierre Moscovici told reporters in Brussels that he has "full confidence in Italian authorities to manage this situation".

He added: "I'm very confident in the capacity of the eurozone to resist all kind of shocks."

Why Italy's referendum seems familiar

German finance minister Wolfgang Schaeuble said Italy should continue the economic reforms begun by Mr Renzi.


He also said investors should be relaxed about the Italian referendum, which was a domestic issue, and said he saw no grounds for there to be a crisis for the euro currency.

"I think we should see the situation in Italy with a certain calmness," he said, adding: "I think there is no need to talk about a euro crisis."

German foreign minister Frank-Walter Steinmeier, however, said that while the result was "not the end of the world", it was also "not a positive development in the case of the general crisis in Europe".

He said he was watching the developments "with concern".

Image: Matteo Renzi announcing his resignation

The markets seemed initially to take Mr Renzi's departure in their stride and appeared to bet against snap elections.

:: Euro falls to 20-month low after Italy vote

Stocks and the euro fell in early trading but there were no signs of panic with the possibility of his resignation having already been largely factored in.

Some analysts fear a deeper crisis of investor confidence could derail a rescue scheme for Italy's most indebted banks, triggering a wider financial crisis across the eurozone.

:: Italy referendum result could hit country's fragile banks

Mr Renzi, the head of the centre-left Democratic Party, had staked his future on the constitutional reform, which was aimed at streamlining Italy's notoriously lengthy legislative process by weakening the powers of the upper house, cut down the number of senators and cut the powers of regional authorities.

His opponents denounced the reforms as dangerous for democracy and saw a chance to topple his government after almost three years.

Mr Renzi, who came to power in 2014, said he took full responsibility for the "extraordinarily clear" defeat, with the final count showing the "No" camp winning 59.1% to 40.9%.

"The experience of my government ends here," Mr Renzi said in a televised address to the nation.

Image: Beppe Grillo is seen as the biggest winner

Spearheaded by the populist Five Star Movement, the biggest rival to Mr Renzi's Democratic Party, the "No" campaign took advantage of the Mr Renzi's declining popularity, a struggling economy and concerns caused by tens of thousands of migrants arriving from Africa.

The vote is a major win for Five Star leader Beppe Grillo, who called the result a "victory for democracy".

Mr Renzi will convene his cabinet for the last time on Monday afternoon and then hand in his resignation to President Sergio Mattarella, who is now charged with brokering the appointment of a new government, or if that fails, calling early elections.

Mr Grillo said an election should be called "within a week" on the basis of a recently adopted electoral law which is designed to ensure the leading party has parliamentary majority.