Europe's main stock markets fell at the start of trading on Monday, with Milan's FTSE Mib index slumping 2.31 percent to 15,336 points after Italian Prime Minister Mario Monti announced his intention to resign.
Elsewhere, London's benchmark FTSE 100 index retreated 0.16 percent to 5,905.00 points, Frankfurt's DAX 30 index dropped 0.44 percent to 7,484.95 points and in Paris the CAC 40 slid 0.46 percent to 3,586.99.
In a dramatic weekend of tense political drama, Mario Monti announced his resignation and Silvio Berlusconi launched a comeback bid.
The developments have put the Monti government's reform agenda on hold and brought forward the election, with a vote now expected as early as February -- well before the government's mandate runs out at the end of April.
In earlier deals, Asian equities mostly rose on Monday as dealers cheered an improvement in the US unemployment rate and another batch of manufacturing figures indicating China's economy is emerging from a slumber.