MILAN Dec 10 Italian shares fell nearly 2.5 percent in early trade on Monday on the back of a decision by Prime Minister Mario Monti to resign as soon as the country's budget law is approved.
Monti's unexpected move will likely bring forward to February a general election due early next year.
The main Milan FTSE MIB share index was down 2.3 percent at 0807 GMT, underperforming other European stock markets. Italian borrowing costs had also jumped higher on Monday following Monti's announcement.
"Italy had gained credibility thanks to Monti's reputation," said Marco Sturlese, a fund manager at Fenice.
"The first market reaction is justified by uncertainty on what will happen in the near future."