European stocks, euro rocked by Italian turmoil

European stock markets and the euro extended losses on Tuesday as political uncertainty in Italy stoked fresh fears about the eurozone.Having already slumped on Monday, Italy's FTSE MIB stocks index shed more than 3% in value, a move mirrored by Madrid's IBEX 35 on Spain's own political crisis.

"The fear of another election and political uncertainty in Italy is driving significant losses throughout Europe," said Joshua Mahony, market analyst at IG traders.

"It comes as no surprise that we are seeing Italian markets suffer heavily, with the FTSE MIB hitting a 10-month low, and the two-year (Italian) bond yield topping 2% for the first time since 2013."

Italy's 10-year bond yields meanwhile were over 300 points higher than Germany's, reflecting investor worry over the prospect of a fresh eurozone crisis.

The euro meanwhile struck the lowest level against the dollar since last July.

Italy, the eurozone's third biggest economy after Germany and France, has been plunged into crisis with President Sergio Mattarella at the weekend vetoing the nomination of a fierce eurosceptic as economy minister.

The move led the prime minister-designate to step down, scuppering the bid by the anti-establishment Five Star Movement and the far-right League to form a government