Europe midday: Stocks fall as Draghi steps down, setting stage for early elections

Stocks in Europe fell back, surrendering their earlier highs after Italian Prime Minister Mario Draghi tabled his resignation.

Draghi's exit followed a vote in the Italian Senate the night before which saw the far-left M5S movement and the far-right League abstain, undermining the goal of recreating a unity government, although Draghi did win the vote.

The ructions in Italy's parliament were expected to result in new elections being called in autumn.

As of 1443 BST, the benchmark Stoxx 600 was slipping 0.41% to 420.79, alongside a 1.85% fall on Milan's FTSE Mibtel to 20,957.16 while the German Dax retreated by 1.18% to 13,126.40.

Euro/dollar was a tad weaker alongside, slipping by 0.06% to 1.0174, although that was down from 1.0278 immediately after the European Central Bank went ahead and hiked interest rates by 50 basis points.

The yield on the benchmark 10-year Italian government bond was 25bp higher to 3.615% on the news about Draghi.

Similarly-dated Spanish government bonds on the other were little changed by comparison.

Investors were also digesting the guidelines provided by the ECB for its new Transmission Protection Instrument or so-called anti-fragmentation tool.