European shares seen lower as Renzi loses referendum, Italian banks in focus

MILAN European shares were expected to open lower on Monday after Italian Prime Minister Matteo Renzi announced his resignation following a crushing defeat in a constitutional referendum.

By 0705 GMT, futures on the Euro STOXX 50 STXEc1 , Germany’s DAX FDXc1, France’s CAC FCEc1 and UK’s FTSE FFIc1 were down between 0.8 and 1.3 percent.

Italian shares are likely to underperform as the outcome of the vote raised doubts over whether troubled lender Monte dei Paschi di Siena (BMPS.MI) would go ahead with a vital cash call.

A decision to scrap the 5 billion euro capital raising would raise the prospect of a possible state intervention in the bank, and also raise jitter over other lenders which also need cash to stay afloat.

“Italian banks have recently seen significant equity price volatility and European trading will focus on this and the capital raising efforts of Monte dei Paschi,” analysts at Credit Suisse wrote in a note.

The index of Italian banks .FTIT8300 has lost nearly half its value this year.

(This version of the story has been refiled to fix milestone in last paragraph)

(Reporting by Danilo Masoni, Editing by Vikram Subhedar)