Where Italy to go: Monti resignation stokes fears (2)

Meanwhile, the Milan stock exchange suffered Europe's biggest losses before closing down 2.2 percent. Bank stocks were especially hit, while concerns that Italy's political uncertainty could deepen the eurozone crisis affected all main money markets on the continent.

After several weeks of calm, markets are now expected to experience increased levels of volatility driven by the unstable political picture in Italy.

"Investors are worried that Italy may return to the same situation of one year ago," Maurizio Mazziero, a Milan-based financial analyst, told Xinhua.

Over the past months, the Monti government has managed to restore Italy's credibility but the possibility, even a vague one, that Berlusconi could influence the next government rings alarm bells by "renewing fears over the country's unreliability," he said.

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