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Markets steady as Renzi poised to become new premier; trading subdued on US Presidents Day

Cuirassiers presidential guards salute as Italian Democratic Party's leader Matteo Renzi arrives to meet journalists at the Quirinale presidential palace after talks with Italan President Giorgio Napolitano, in Rome, Monday, Feb. 17, 2014. Renzi was asked to form a new government to replace the one he sacked through a stunning power-grab within his own party. Renzi drove himself to his meeting with Napolitano, mimicking the down-to-earth approach of his predecessor, Enrico Letta.(AP Photo/Alessandra Tarantino)

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Cuirassiers presidential guards salute as Italian Democratic Party's leader Matteo Renzi arrives to meet journalists at the Quirinale presidential palace after talks with Italan President Giorgio Napolitano, in Rome, Monday, Feb. 17, 2014. Renzi was asked to form a new government to replace the one he sacked through a stunning power-grab within his own party. Renzi drove himself to his meeting with Napolitano, mimicking the down-to-earth approach of his predecessor, Enrico Letta.(AP Photo/Alessandra Tarantino)

LONDON - Markets in Europe were steady as exchanges in Toronto and New York were closed on Monday for holidays.

Overseas, investors sought clarity over Italy's political and economic future, now that Italy's President Giorgio Napolitano has asked Matteo Renzi to form a new government.

Renzi, who is the mayor of Florence and poised to be the country's youngest premier at 39 years of age, engineered last week's ouster of Enrico Letta, who had only been Italy's leader for 10 months. Renzi argued a change of government was needed to get on with reforms.

Italy only recently emerged from recession, figures showed last week, but growth remains paltry. Its debt burden is also the second-highest in the 18-country eurozone, behind Greece.

"While political turmoil is nothing new in Italy, the return to growth last week was, but it was meagre at best, and Renzi may not have much of a honeymoon period if all we get is more of the same," said Michael Hewson, senior market analyst at CMC Markets.

By the close, Italy's FTSE MIB index was up 0.1 per cent at 20,459.65, while Germany's DAX fell 0.1 per cent to 9,65.76. The CAC-40 in France ended 0.1 per cent lower at 4,335.17.

The FTSE 100 in Britain outperformed its counterparts, closing 1.1 per cent higher at 6,736.00, gaining momentum as it broke through the 6,700 level for the first time in over 3 weeks.

"It is not often that Europe struggles to keep pace with the bullish moves of U.K. traders, but today looks to be that exception to the rule," said Alastair McCaig, market analyst at IG.

One reason why trading has proved lacklustre in Europe is the fact that U.S. markets are closed for Presidents Day.

There was an equally subdued feel in currency markets, where the euro was flat at US$1.3707 and the U.S. dollar fell 0.2 per cent to 101.30 yen.

Earlier, in Asia, the mood was a little bit more upbeat, after figures showed that lending by Chinese banks and in the largely unregulated underground market rebounded to 2.6 trillion yuan ($430 billion) in January from December's 1.2 billion yuan. Lending usually surges at the start of a new year but January's rise exceeded forecasts and might help to ease worries about cooling retail sales, manufacturing and other activity.

Among the gainers was the Shanghai Composite Index, which added 0.9 per cent to 2,135.41. Japan's Nikkei 225 gained 0.6 per cent to 14,393.11 while Hong Kong's Hang Seng rose 1 per cent to 22,520.74.

Tokyo's rise came despite Japan's latest quarterly economic growth disappointing forecasters, holding steady at 0.3 per cent. Growth in private consumption accelerated to 0.5 per cent from the previous quarter's 0.2 per cent but fell short of forecasts.

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