Euro sinks after Italian referendum
17 minutes ago

The euro fell sharply against the dollar after Italian Prime Minister Matteo Renzi suffered a heavy defeat in Sunday's referendum.

The fall continued after Mr Renzi announced his intention to resign. A short while ago the euro was trading at $1.0532, down 1.3% from Friday's close.
The single currency is now at its lowest level since March 2015.

The referendum was over plans to streamline parliament, but for many it was a chance to register discontent.

The Italian economy is already in a fragile state and a period of political uncertainty would be likely to do further damage.

"While the markets are likely to remain nervous as we start a new week, they haven't fallen of a cliff, so far.

"Either markets are becoming immune to political risk, or they are taking the view that the Italian issue will be a slow-burner, even if the President can't form a government, he still has 70 days to try, and that seems quite far away at this stage," said Kathleen Brooks, research director at City Index Direct.

Italian banks including Monte dei Paschi di Siena have been under pressure
'Beleaguered' banks

Analysts are particularly concerned about Italy's banking industry, which is seen as vulnerable to a loss of confidence.

Many banks are struggling with a burden of bad debt and are in need of refinancing.

That finance would be harder to come by amid a political crisis.
"Italy's banks don't have time to waste to try and boost their capital buffers. A win for the Yes camp in this referendum could have seen investors help to recapitalise the banks, however, it is unknown whether investors will do so now that the No camp have prevailed.
"Without a sitting government, will there be official help for Italy's beleaguered banking sector?" said Ms Brooks.

The size of Italy's government debt is also a concern. Government borrowing, depending on which figures you look at, is one of the largest in the eurozone.