European shares inched lower in quiet trading yesterday with Italian stocks left behind as worries over possible early elections weighed, hitting banks.

Activity was reduced as holidays in major markets such as Britain and the US kept investors away.

The index of the top 50 eurozone stocks slipped 0.1 per cent, while Italian blue chips fell 1.1 per cent, on track to end at their lowest close in over three weeks, while Germany’s DAX added 0.1 per cent. Weekend reports that Italy’s main parties could converge on a proportional electoral law pointed to growing chances of an election in the autumn, possibly leading to no clear majority.

In an interview on Sunday, former prime minister Matteo Renzi said an accord on a proportional voting system was possible though it could result in a coalition government that may have trouble holding together.

“The risk of early elections has suddenly increased to 60 per cent,” LC Macro Advisers founder Lorenzo Codogno said. “A hung parliament is thus the most likely outcome”.

Italian banks already hit by worries surrounding the rescue of two ailing regional lenders Popolare di Vicenza and Veneto Banca lenders, fell 1.8 per cent, dragging eurozone banks down 0.4 per cent.

Among Europe’s heavyweight lenders, Italy’s Intesa Sanpaolo and UniCredit both fell more than 1.7 per cent, while Deutsche Bank slipped 0.2 per cent and Banco Santander added 0.1 per cent.

Spanish-listed shares of International Airlines Group, the parent company of British Airways, fell 2.7 per cent. British Airways flights suffered massive disruptions over the weekend with over 1,000 flights cancelled after a computer system failure.

Lanxess rose more than three per cent, leading gainers on the Stoxx after news that billionaire Warren Buffett had acquired a three per cent stake in the German chemicals maker.