CONFIDENCE in Italy's banks and the wider economy is falling apart, as investors continue to digest Britain's vote to leave the European Union (EU).
Pointing to real fears over the future of the bloc, Europe's top stock markets have failed to recover from the shock of the Brexit vote.
In stark contrast, Britain's premier index the FTSE 100 has left its continental counterparts in the dust.
The London index held steady in today's trading, following two days of strong gains that have taken the index to its highest level since April.
Meanwhile, Germany's DAX and France's CAC remain down around six per cent from Thursday's close before the referendum.
But the the biggest concern is Italy where markets still down 11 per cent amid fears over the stability of the country's banks and knock-on affects on the economy.
The Italian banks index is down by a whopping 26 per cent - or only just above record lows seen in 2012.
Italian authorities are struggling to restore confidence amid around & pound; 270billion of bad loans sitting in their banks' books.
The government suffered another setback yesterday after German Chancellor Angela Merkel ruled out allowing Italian policymakers to pump tens of millions of euros into the banking system to help stabilise it.
Michael Hewson, chief market analyst at CMC Markets UK, said: "Under current EU state aid rules any attempts to help banks must involve a bail-in process that does not involve using taxpayer's money.
" Italian Prime Minister Matteo Renzi has tried to argue that the Brexit uncertainty has destabilised Italy's already fragile banks.
"The reality is the problems of Italy's banks predate last week's Brexit vote, and he knows it."
Renzi yesterday admitted Italy should have fixed its banks' problems four or five years ago under previous governments, when EU rules on state aid were less rigid, but it failed to do so.
However, he insisted the government would be able to ensure that citizens 'savings were protected if the banks' troubles continue to grow.
Investors today continued to dump stocks in Italy's two biggest banks, UniCredit and Intesa Sanpaolo.