Europe midday: Italian stocks slump amid warning from Paris
Worries about the political situation in Italy are eroding earlier gains for stocks on the Continent, despite apparent progress in trade talks between China and the US at the weekend.
Linked to the latter, investors were also monitoring fresh gains in the US dollar, which were exerting a large drag on emerging market currencies.
On Sunday, Italy's two main anti-establishment parties decided on their choice for Prime Minister and were set to communicate it - together with a 57 page 'contract' between the two parties - to the Republic's president, Sergio Mattarella, who under the country's Constitution had the final say on the matter, later in the day.
As of 1246 BST, the benchmark Stoxx 600 was ahead by 0.22% or 0.88 points at 395.55, alongside a 0.47% or 26.17 point advance on the Cac-40 to 5,640.68.
In parallel, Milan's FTSE Mibtel was declining by 0.85% or 198.77 points to 23,248.55, while Spain's Ibex 35 had turned around to trade down by 0.13% or 13.40 points to 10,101.30.
Some analysts, such as those at UniCredit Bank, believed there were sufficient 'checks and balances' built into Italy's parliamentary system to avoid any policy measures - in the short-term - that might undermine the sustainability of the country's debt pile.
On Sunday, UniCredit's Erik F. Nielsen told clients: "If I'm right on that, we may already have seen most of the Italian market weakness. For the medium- to longer term, I'll be looking to assess whether measures are taken to (hopefully positively) impact trend growth."
But other observers were considerably more critical. Indeed, in a radio interview France's finance minister said Italy back tracking on its fiscal commitments and bank recapitalisation plans might undermine the stability of the entire single currency area.
The result was to be seen in Italy's risk premium, which had bloated to 174 basis points, versus 165 at Friday's close.
European Central Bank governing council member Ewald Nowotny echoed those concerns, to a degree.
According to Reuters, on Monday Nowotny said "I hope that the practice will be a much wiser approach than what is here today from the newspapers."
Meanwhile, and on the global trade front, following two days of negotiations, and after having agreed on a framework to reduce tensions, at the weekend US Treasury Secretary Mnuchin said the Trump administration had placed its threat of tariffs on Chinese goods "on hold".
No numerical target for reducing the US bilateral trade deficit was announced, although Chinese officials said one had been agreed.
Markets appeared to greet news of a deal, pushing the US dollar higher, although that in turn was adding to the pain for some emerging markets, such as Turkey, whose currency, the lira, was falling by another 2.08% to 4.5853 versus the Greenback.
In the corporate space, France's EdF was negotiating the sale of a 49% stake in a portfolio of UK wind farms in a transaction that may be worth £600m, the FT reported.