European stock markets were slightly higher Monday, the first day of trading since Italy's premier Matteo Renzi resigned following his loss in a key referendum over the weekend.
The euro initially sold off to its lowest level in almost two years on news that Italians had rejected Renzi's pitch to give the prime minister more power by an almost 60-40 margin.
"There had been a small, flickering hope that maybe, once again, polls were wrong," Bank of Montreal economist Jennifer Lee said. "But they weren't."
Renzi had said the changes, which would strengthen the administrative branch and reduce powers of Italy's Senate, were necessary to rejuvenate the economy.
Similar to the Brexit vote and the election of Donald Trump, Renzi's loss was a rebuke to the status quo including industrialists, bankers and establishment institutions that supported the changes.
"Risk sentiment has taken a hit from rejection of the Italian referendum," Citigroup analysts said in a report. While the result was in line with what polls had predicted, the vote still "raises the political risks in Italy and may weigh on its troubled banking sector. This also casts significant doubts over Italy's membership of the European Union and the future of Eurozone."
The isolationist and protectionist Five Star Movement party says it is ready to form government, and the party has made leaving the euro one of its central campaign planks.
While the euro dipped to a 20-month low of $1.0506 US against the dollar over the weekend, by Monday it had inched back up to $1.0720 US.
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