ITALY ROCKS MARKETS

ITALIAN stocks slumped and bond yields rose as prime minister Mario Draghi stepped down.

He quit after three key parties in his coalition snubbed a confidence vote.

Traders worried about where a new leader might take economic policy.

Italy’s FTSE MIB index of leading companies fell as much as 2.9pc before recovering some of its losses to end 0.7pc lower.

And traders rushed to sell government debt, known as bonds, as fears grew over Italy’s future. This pushed up bond yields, or how much investors are paid to lend to the government, to 3.6pc.