Italy leads euro zone shares lower on govt crisis threat

LONDON Mon Aug 26, 2013 4:28am EDT

LONDON Aug 26 (Reuters) - Italian stocks led euro zone bourses lower on Monday as mounting concerns about a government crisis in the country fuelled a selloff in shares exposed to Rome's government debt.

The euro zone blue chip Euro STOXX 50 index was down 0.6 percent at 2,809.92 points at 0826 GMT.

Italy's FTSE MIB was down 1.6 percent after members of Silvio Berlusconi's centre-right party openly warned they would bring down the government if the former premier is expelled from parliament.

"It doesn't look like the politicians will find a compromise to get out of this crisis, which in turn puts all measures that need to be taken to spur the economy on ice," a Milan based trader said.

"There is the risk that this could hit our economic recovery at a time when the country has shows some signs of a pick-up."

Italian banks UniCredit and Intesa Sanpaolo , and insurer Generali, down between 2 percent and 3 percent, were the biggest fallers on the Euro STOXX 50 as investors worried about their holdings of Italian sovereign debt.

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