Italian stocks had a totally wild day, gaining more than 4%

Italian stocks went wild on Tuesday as investors in the country continued to digest the rejection of constitutional reforms in Sunday’s referendum, and the subsequent resignation of Prime Minister Matteo Renzi.

The country’s benchmark FTSE MIB index in Milan climbed more than 4% in trade on the day, with the financial sector performing particularly strongly as talk of a bailout for stricken lender Monte dei Paschi di Siena intensified. Here’s the chart:

Government officials reportedly told executives at Monte dei Paschi to prepare for a possible €5 billion state bailout as soon as this weekend, according to the Financial Times, while the bank’s CEO Marco Morelli and Chief Financial Officer Francesco Mele are said in Frankfurt to hold talks with the officials at the eurozone’s Single Supervisory Mechanism.

The Wall Street Journal reports that Morelli and Mele are there to discuss the implementation of the bank’s €5 billion capital increase.

Developments in the future of Monte dei Paschi have pushed stocks in the wider Italian banking sector massively higher, with Italy’s largest lender, and the country’s only globally systemically important bank, Unicredit, up more than 12% on the day. Here’s how that looked:

Tuesday’s massive rally followed on from a rollercoaster day on Monday when e
quities in the country briefly crashed before fighting back strongly almost immediately after the start of trade, and then dropping again as the day progressed, before climbing back to the close.

Sentiment in Italy spilled over into the broader European markets, where every major index was substantially higher. The standout performer was Spain’s IBEX, which gained more than 2.5%, while French and German indexes both saw big rises. Here’s the scoreboard:

In the broader global equity markets, sentiment in the USA is subdued, with all three major indexes — the Dow, the Nasdaq, and the S&P 500 — moved less than 0.1% from their opening price in late morning trade.

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