Euro skids

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SINGAPORE: The euro fell to a 20-month low on Monday and investors fled riskier assets after Italian Prime Minister Matteo Renzi said he would resign following a stinging defeat on constitutional reform that could destabilise the country´s shaky banking system.

European stock markets are also set for a weak start, with Italy underperforming as investors brace for turbulence and political crisis in the euro zone´s heavily indebted third-largest economy.  Financial spreadbetter IG Markets expects the EuroSTOXX 50 to open down 0.6 percent, and Germany´s DAX and Britain´s FTSE to start the day 0.4 percent lower.

Renzi´s failure deals a body blow to a European Union already reeling under anti-establishment anger that led to the shock exit of the UK from the club in June.

"It´s not very hard to see a new election on the horizon, and it´s not very hard to see the (opposition) 5-Star Movement taking power with stated aims to either leave the EU, drop the euro, or both," said Mark Wills, head of State Street Global Advisors´ investment solutions group for the Asia Pacific.

"For Italy, establishing stable governance and a plan to guide the nation is of critical importance given the fragility of the economy, challenging policies and the liquidity problems in the banking system.