Euro bounces back in Asian trade following sell-off from Italian vote

The result from Sunday's poll led market watchers to fear that Rome could backtrack on some of its recent economic reforms that have been put in place to pay down its huge debts.

In morning Tokyo trade, the euro bought 120.90 yen and US$1.3085 compared with 120.12 yen and US$1.3065 late Monday in New York.

However, the European unit was still well below the 124.24 yen and US$1.3197 in Asia on Monday, before the election results.

The dollar also fetched 92.52 yen, up from 91.92 yen in New York. However the greenback was also well off the 94.77 yen in Tokyo Monday as dealers banked on the yen's status as a safe haven during economic uncertainty.

“There is every reason to take the Italian election results seriously,” National Australia Bank said in a note.

The result means Italian politics is in stalemate between right and left, while a new protest party — the Five Star Movement — calling for a referendum on the euro was the biggest gainer, creating dozens of new lawmakers and making it Italy's third political force.

Traders began to sell the yen again after Monday's rally in New York as they refocused on reports that Japan's Prime Minister Shinzo Abe would nominate Asian Development Bank chief Haruhiko Kuroda as the new Bank of Japan's new chief.

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