Italian Prime Minister Matteo Renzi resigns

Italian Prime Minister Matteo Renzi reacts after losing his constitutional reform referendum

Italian Prime Minister Matteo Renzi reacts after losing his constitutional reform referendum

Italian Prime Minister Matteo Renzi resigned on Wednesday after a bruising referendum loss at the weekend, with most parliamentary factions pushing for an early election in a few months' time. Italians voted Sunday in a.

(AP Photo/Shizuo Kambayashi). A man walks past an electronic stock indicator of a securities firm in Tokyo, Monday, Dec. 5, 2016.

Political uncertainty is hardly disappearing with Angelino Alfano, interior minister in Prime Minister Matteo Renzi's outgoing government, saying a new election could be held as soon as February.

He rejected any need to pass a new electoral law before going to a general election following Renzi's resignation expected later in the day.

The political crisis sparked by the referendum coincides with a crisis in Italy's debt-laden banks, especially at its third-biggest lender Monte dei Paschi di Siena, which looks likely to require government intervention to survive.

Still, with USA interest rates set to rise and Euro-Zone monetary policy likely to remain accommodative, the strength of the Euro since the Italian referendum seems to turn conventional wisdom on its head, unless the latest move simply represents short-covering by traders expecting the euro to fall.

The statement said that Mr Renzi could hand in his resignation once the budget is passed.

"I think the fact that we went through the referendum and not much has changed since then is [good] for USA markets", said Kate Warne, investment strategist at Edward Jones, adding that USA stocks were taking their cue from European markets.

But, in a decision widely expected, Mattarella told Renzi "to delay his resignation until that task (of the budget law) is completed".

Ultimately, it will be up to Mattarella to decide whether Parliament should be sent packing early.

Silvio Berlusconi's Forza Italia and a left-wing minority inside Renzi's PD want a new administration to be formed with the backing of the current parliament, perhaps to last until 2018, to give them time to resolve internal party battles.

The head of the Federation of German Industries, or BDI, says that "Italy must not put off resolving its pressing problems".

And another 12,500 investors lost around 430 million euros when four more small central Italian banks were rescued previous year. After Monti's government unraveled, a Democrat, Enrico Letta, was appointed.

While the young, energetic Mr Renzi would often provoke and disagree - notably on the EU's policies on migration and austerity - he was undoubtedly engaged in Europe, and saw the European Union as the place for Italy to wield its influence.

Italy's parties now have to work together on the new electoral law, with Five-Star urging a swift deal to open the way for elections in early Y 2017, a year ahead of schedule.

Finance Minister Pier Carlo Padoan is a potential candidate for premier along with Transport Minister Graziano Delrio, Culture Minister Dario Franceschini and Senate Speaker Pietro Grasso.

European partners sought to downplay the risk for the common euro currency and European unity.

"This is a government crisis, not a state crisis".

But German Foreign Minister Frank-Walter Steinmeier said it was "not a positive message to Europe at a hard time".

However, Renzi agreed to meet a president's specific request to postpone his stepping down.

Meanwhile, the European Central Bank is acting as a big backstop in bond markets, indirectly protecting Italy's borrowing rates from rising too much.

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