European shares drop on fresh Italian crisis


PARIS, Sept 30 (Reuters) - European shares sank in earlytrade on Monday, falling for the fifth time in seven sessions,as a new political crisis in Italy and the prospect of ashutdown of the U.S. government rattled investors.

At 0708 GMT, the FTSEurofirst 300 index of top European shares was down 0.7 percent at 1,245.47 points. Italy'sFTSE MIB dropped 2 percent.

Political instability in Italy deepened on Saturday when thefive Cabinet ministers who are from former Prime MinisterBerlusconi's party suddenly stepped down, threatening to bringdown the government and force new elections seven months afterthe last vote.

Euro zone banking stocks were among the most hit, with thesector index losing 2.6 percent. Banco Popolare was down 4.5 percent, Commerzbank down 2.5percent and Societe Generale down 1.8 percent.

In Washington, chances that Republicans and Democrats couldreach a deal on funding the government before the fiscal yearends at midnight on Monday seemed increasingly thin.

On Sunday, the Republican-controlled House ofRepresentatives passed a measure that ties government funding toa one-year delay of President Barack Obama's landmark healthcarerestructuring law, while Senate Democrats have vowed to rejectit.

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