Italy's League boss says markets shouldn't fear centre-right government

The head of the anti-migrant, euroskeptic League, which emerged from Italy's elections as the largest party in the centre right, said Monday the grouping would be able to govern and markets have no reason to fear.

"We have right and duty to govern," Matteo Salvini told a news conference a day after parliamentary elections.

Salvini also repeated his stance that the euro is bad for Italy, saying "it's a wrong currency and a wrong choice."

"The euro was, is and remains a mistake," he said, adding, however, that holding a referendum over Italy's continued participation in the single currency was "unthinkable."

He said his party, which won nearly 18 per cent of the vote — up from four per cent five years ago — would be willing to talk to all parties, but indicated it would not take part in a "minestrone" soup coalition, apparently referring to a broad coalition government.

The four-party, centre-right grouping looks set to win about 37 per cent of the vote. The League has overtaken former prime minister Silvio Berlusconi's Forza Italy party as the largest in the coalition. Forza Italia won nearly 14 per cent of the vote.

Berlusconi, who has not been seen in public since the vote, met Salvini on Monday in his villa near Milan.

While both League and the populist 5-Star Movement — which, at over 32 per cent, was the party with the biggest individual share — prospered in Sunday's parliamentary election, no single group got enough support to govern alone.

"It could take weeks to figure out a government because nobody has enough votes for a majority," said CBC's Megan Williams, reporting from Rome.

"This is typically an Italian situation," Williams said. "We've seen this before. What could happen is the current government could stay in power, and if they're not able to form a government, we could see elections sooner than people want."

Former PM Renzi steps down

Their gains came at the expense of the centre-left Democratic Party (PD), whose leader, former prime minister Renzi, announced he would step down as leader on Monday.

The PD took just under 20 per cent of the vote in Sunday's ballot, its worst result since its creation in 2007.

"It is obvious that I will leave the helm of the PD," said Renzi, who quit as prime minister when Italians voted against him in a 2016 referendum on constitutional reform.

Despite his decision to stand aside, he said he expected his party to shun any coalition talks. "The Italian people have asked us to be in opposition, and that is where we will go," he said.

"We will never form a government with anti-system forces," he added, referring to the 5-Star and the League.

Populist parties have been on the rise across Europe since the 2008 financial crisis. Italy's mainstream parties have found it especially hard to contain voter anger, with the economy still six per cent smaller than a decade ago and unemployment stuck at about 11 per cent.

The disenchantment may have affected turnout. Italy's Interior Ministry says the turnout for the national election was 71.48 per cent, a drop from the 75 per cent of eligible voters who participated in the 2013 election.

With a shift away from mainstream parties, the FTSE MIB index in Milan was down 1.2 per cent Monday, on a day when global markets were trading higher.

The solution feared most by markets is a marriage between 5-Star and League. While the League wants Italy to abandon the euro, 5-Star is seeking a costly "universal income" to fight poverty that could drive up the country's already huge debt pile.

European leaders in wait-and-see mode

Formed in 2009, 5-Star has fed off public fury over institutional corruption and economic hardship. Some have questioned whether other parties would be able to work with it.

"Di Maio wins, Italy ungovernable," was the front page headline in La Stampa newspaper.

European leaders reacted with caution to the results.

French President Emmanuel Macron said on Monday the election result was a reminder of the challenges tied to migration.

"Italy has, it's undeniable, suffered for months and months under the pressure of migration," Macron said in Paris.

A top aide for German Chancellor Angela Merkel says that despite Italy's election showing no faction winning a clear majority, she hopes "Italy will manage to build a stable government and especially a government in the spirit of Europe."

The general-secretary of Merkel's conservative Christian Democrats, Annegret Kramp-Karrenbauer, said Monday in Berlin, "the view across the Alps to Italy today is not an easy one, because it's not foreseeable after this difficult result … how long it will take to get a government, whether there will be one at all, and who will lead such a government."

A German trade lobby group urged Italy's next government to be "constructive" about the European Union's future course to ensure the two countries' economies continue to thrive.

The Association of German Chambers of Commerce and Industry says it is "of great importance for the German economy whether Italy can form a stable government and continue following the path of reform it has set out on."

In Brussels, a European Commission spokesperson said it was confident a stable administration could be formed, "and in the meantime Italy has a government with whom we are working closely."