Europe open: Shares flat but Italy gains after right-wing poll win

European shares were flat at the open on Monday as markets continued to hammer Britain’s pound in response to the UK government’s mini-budget last week, while Italian shares rose sharply after the hard right Georgia Meloni looked set for electoral victory.

The pan-European Stoxx 600 had edged into positive territory in early deals. The pound fell sharply against the dollar, heading towards parity, and wasn’t faring much better against the euro.

However, Italy's FTSE Mib index made strong gains after the centre-right coalition led by Meloni won a clear majority in both houses of parliament in Italy's general elections.

Oil, gas and mining stocks were all lower on the back of weaker crude and metal prices and a strengthening dollar.

“Sterling plunged to an all-time low against the US dollar in Asian trading before paring some losses as confidence in the UK’s fiscal policy went up in smoke,” said Markets.com analyst Neil Wilson.

“GBP-USD slipped almost 5% to $1.035 in a brutal 20-minute selloff in the early hours, extending its run lower from Friday after the chancellor announced sweeping tax cuts.”

“The judgment of the market to the new fiscal policies is obvious enough; the bond vigilantes have returned with a vengeance. Following the initial sell-off we’ve seen cable bounce back to above $1.07 but it’s clear there is no love for the pound.”

In equity news, UK housebuilders all fell over fears of higher interest rates, with Travis Perkins, Vistry, Persimmon, and Taylor Wimpey in the red.

Uniper shares were up 14% after the German government last week agreed to privatise the troubled energy provider.

Reporting by Frank Prenesti at Sharecast.com