European equities rally despite Italy woes

LONDON - European stock markets rebounded on Wednesday as dealers shrugged off tense political turmoil in Italy.

In late morning deals, Milan's FTSE MIB index of major companies rallied 1.8 percent, as Italian President Sergio Mattarella began talks with key players in a bid to end political limbo in the eurozone's number three economy.

The benchmark index had dived 1.1 percent on Tuesday as the shock resignation of Prime Minister Giuseppe Conte threw Italy into political chaos.

Elsewhere on Wednesday, the Frankfurt and London stock market each won 1.1 percent, while Paris piled on 1.4 percent. "The markets have seemingly taken the latest political upheaval in Italy in their stride and are gaining," noted XTB analyst David Cheetham.

However, the European single currency flatlined against the dollar as Italy's latest crisis offset hopes that Germany's government could unveil measures to avert a downturn.

Conte resigned this week, hitting out at far-right Interior Minister Matteo Salvini for pursuing his own interests by bringing an end to the government coalition. President Sergio Mattarella must now decide to form a new coalition or call an election, throwing up more uncertainty and another possible budget standoff with the European Union. Aside from Italy, investors' focus was also turning to a key speech by Federal Reserve boss Jerome Powell at the end of the week.