The deepening of the political crisis in Italy shook the markets and led to the second day of decline of the Italian and European exchanges.

The Italian stock market started today’s trading with a decline of 1.8 per cent, after which the downward trend deepened to 2.6 per cent.

The spread (interest rate differential) between the Italian and German 10-year bonds rose to 235 points – the highest level since November 2013. Interest rates on Italian securities rose to 2.9 percent.

The attempt of the populist parties “League” and “Five Stars” movement to form a government failed two days ago when the cabinet proposed by them was rejected by Mattarella for the nomination of a eurosceptic as the minister of economy.

Faced with a firm opposition, Cottarelli government may not be able to win the vote of confidence later this week, which will put Italy ahead of new elections in the autumn.

The euro has hit a six-month bottom level related to US dollar on Tuesday as a consequence of the political crisis in Italy. The possibility of new parliament election is also causing its negative trend.

The European currency has lost its positive impulse from the beginning of the week, when President Mattarella did not approve the new cabinet, because the Eurosceptic attitude towards the euro. This resulted in increasing the value of the currency against the dollar.

Investors fear that the elections, which can be held in August, are considered a quasi-referendum on Italy’s role in the European Union and the eurozone and could lead to an even greater strengthening of the Euro-skeptic parties of the Apennines.

By 2017, intra-EU trade accounts for 56 percent of Italy’s exports (Germany – 13 percent, France – 11 percent, the United Kingdom and Spain – 5 percent), and 61 percent of Italy’s imports come from EU countries (Germany – 16 percent, France – 9 percent, the Netherlands – 6 percent).