08:30

The Italian stock market has fallen in early trading as traders fret that Italy faces a period of political instability.

The benchmark FTSE MIB index tumbled by 2% at the open. It then stabilised around 1% lower, so there’s no sign of actual panic.

Unicredit, Italy’s largest bank, has shed 2.5% while UBI Banca are down 3.8%.

Rebecca O’Keeffe, Head of Investment at interactive investor, says the markets are nervous.

“Italy looks to have taken a step to the right and moved towards populism and change.

The complexity of the Italian voting system makes it very difficult to establish what happens next and when, but neither of the anti-establishment Five star movement or League parties are an attractive option for markets or the euro.”



Shares in Silvio Berlusconi’s Mediaset company have fallen by over 4% after his Forza Italia party did worse than expected in Sunday’s election, lagging behind the Northern League. Mediaset has been fighting a long legal battle with France’s Vivendi, and a strong showing by Forza Italia would have strengthened its hand.



See Business Live for more on the economic fallout from the election.