LONDON, Dec 10 (Reuters) - Italian BTP futures dropped in early trading on Monday as Italian Prime Minister Mario Monti's decision to resign early cast doubt over the country's political future, hurting riskier euro zone debt.
Monti said on Saturday he would resign once the country's budget for 2013 is approved, raising questions over who will take the reins of the euro zone's third largest economy as it remains a focus of the three-year region-wide debt crisis.
The announcement, which will potentially bring forward an election due early next year, comes after former Prime Minister Silvio Berlusconi's party withdrew parliamentary support for the government and after Berlusconi said he would run to become premier for a fifth time.
Italian BTP futures fell 140 ticks to 108.67. German Bund futures rose 10 ticks on the day to 145.82.
"That's bad... I think that will not help Italian periphery," said one trader.
"Any question over their dedication to austerity is not going to be good for BTPs (Italian debt) especially given the fact that everyone is long," he said in reference to the recent bout of buying based on the prospect of central bank support.