After just nine months in charge of Italy’s fragile grand coalition government, Enrico Letta looks set to be ousted by his Democratic Party (PD) colleague Matteo Renzi.
With investors preferring stability to uncertainty, markets sold off on Thursday as the political turmoil unfolded, accentuating a wider “risk-off” move across European bourses. The FTSE MIB Index was down around 1.3 percent in afternoon trade, but pared some losses after a relatively successful bond auction by the Italian treasury.
But market watchers are now watching afternoon events in Rome, with the party gathering to vote on Letta’s economic reforms. It could also decide whether the largest party in the coalition will continue to back the prime minister amid widespread speculation that Renzi will push for the party to withdraw its support for Letta.
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