The euro initially rallied 0.6% to $1.1728, pulling itself above 6-and-a-half-month lows, but headed back towards the day’s lows to trade only 0.1% higher at $1.1655.
The single currency strengthened by 0.8% against the Swiss franc, rebounding from near three-month lows to trade at 1.1629, but also gave up much of those gains.
Italian 10-year bond yields had dropped 10 basis points to 2.35% in early trade, coming off one-year highs, but investors quickly booked profits, pushing yields up 3 basis points on the day.
Italy’s FTSE MIB index turned negative on the day after climbing 1.4% earlier as financials and utilities stocks surged.
“If there are new elections in autumn, then the populists are likely to get a stronger share and a more extreme mandate,” said Peter Chatwell, head of European rates strategy at Mizuho International.
Europe’s STOXX 600, and Germany’s DAX were flat on the day. MSCI’s main European index was down 0.1% while its Asian counterpart rose 0.4% as a retreat in oil prices from record highs helped sentiment.
Oil prices extended their decline from last week on growing expectations that major oil producers may ease their 17-month-old production cuts.
A return to the oil production levels that were in place in October 2016, the baseline for the current deal to cut output, was one of the options for easing curbs, Russia’s energy minister said on Saturday.
Brent crude futures dropped as much as 2.6% to $74.49 a barrel, their lowest in about three weeks. They last stood at $75.00, down 1.8%. US crude futures dropped to six-week low of $65.80 a barrel, shedding 3.1%, and is on course to post its fifth day of decline.
US S&P500 mini futures rose 0.3%, but market holidays in the world’s two biggest financial centres — London and New York — could make trading slow and illiquid for the day.