Italian Prime Minister Matteo Renzi announced he will resign Monday after suffering a stinging loss in a reforms referendum, triggering immediate calls from a populist party and other opposition forces for elections to be held soon.

"The 'No's have won in an extraordinary clear-cut way," Renzi told reporters in Rome about an hour after polls had closed in Sunday's balloting.

"I lost and the post that gets eliminated is mine," Renzi said. "The government's experience is over, and in the afternoon I'll go to the Quirinal Hill to hand in my resignation" to President Sergio Mattarella.

Leaders of the populist 5-Star Movement, which is led by comedian Beppe Grillo, joined the chorus for early elections. The 5-Stars are the chief rivals of Renzi's Democrats and are anxious to achieve national power for the first time.

With ballots counted from nearly half of the polling stations, the No votes were running at nearly 60 per cent to 40 per cent for the Yes votes on reforms Renzi claimed were vital to modernize Italy.

Opposition Leader Matteo Salvini, of the anti-immigrant Northern League, said that if the exit polls are confirmed, the referendum will be a "victory of the people against the strong powers of three-quarters of the world." Some read the referendum as an outlet for growing anti-establishment, populist sentiment in Europe.

Renzi vowed to resign if the reforms were rejected. The announcement caused the euro to tumble in the early Asian market, slipping 1.3 per cent to $1.0505 US, falling below its 1 1/2-year low of $1.0518 touched late last month.

The prime minister made no comment as he voted in Pontassieve, a Tuscan town east of Florence, along with his wife, Agnese Landini.

The risk of political instability in Italy, Europe's fourth largest economy, has triggered market reaction before the vote, with bank stocks sinking and the borrowing costs on sovereign debt rising.

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The leader of the Five Star Movement, Beppe Grillo, delivers a speech about constitutional reforms on Dec. 2 in Turin. Grillo is pressing Italians to vote No to reforms in Sunday's referendum. (Marco Bertorello/AFP/Getty Images)

European partners were closely monitoring the vote, which comes on the same day as a runoff in Austria that could put a right-wing populist in power for the first time since the Second World War.

A headline in the Frankfurter Allgemeine Zeitung said Renzi's "arrogance is his shortcoming," noting that "Europe is at stake" in the vote. The Guardian noted that the referendum was among a series of votes in Europe that could "conceivably herald the end of the European project in its current form."

Reducing Senate powers

The referendum aimed to streamline Italy's cumbersome lawmaking process by reducing the powers of the Senate, while also removing some key decision-making powers from regions.

Renzi has argued that the reforms dismantle bureaucracy and will make Italy more attractive to investors and help his drive to transform the country. But his decision to tie the outcome to his political future transformed the vote into a plebiscite on his leadership.

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Prime Minister Matteo Renzi and his wife Agnese Landini vote in the referendum on constitutional reforms at a polling station in Florence. (Claudio Giovannini/AFP/Getty Images)

Political opponents hoped to tap populist sentiment that has been gaining ground with the U.K. vote in June to leave the European Union and the U.S. presidential victory by billionaire political outsider Donald Trump.

A Yes vote would have strengthened Renzi's government, giving it impetus to complete its five-year term and time to prepare for elections in 2018, while a No vote would favour early elections sometime next year.

Former PMs against reform

Three former prime ministers — Silvio Berlusconi, Massimo D'Alema and Mario Monti — have come out against the reform, albeit for different reasons. Berlusconi has argued that it concentrates too much power in the prime minister, while Monti says the reforms don't go far enough and downplayed the risk of political instability.

How the vote plays out politically is likely to depend on the turnout and the margin of the decision.

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A woman holds a 'Yes' placard in Florence on Dec. 2. before Italian Prime Minister Matteo Renzi arrives in the city for the final rally in the campaign. (Alessandro Bianchi/Reuters)

"For example, if only 30 per cent of eligible voters turn out, the result will hardly be influential," the founder of La Repubblica, Eugenio Scalfari, wrote in a column on Sunday.

Though Renzi announced his resignation right away, analysts say President Mattarella, whose job it would be to designate someone to form a new government, is unlikely to move until parliament passes a new budget law.

More than 46 million Italians were eligible to cast votes starting at 7 a.m. local time, while another 4 million were registered to vote abroad. The overseas votes were being tallied under guard at a warehouse outside of Rome.

Polls closed at 11:00 p.m. local time, or 5:00 p.m ET.

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A supporter of the Five Star Movement holds 'No' shaped balloons before a campaign meeting in Turin related to Sunday's referendum on constitutional reforms. (Marco Bertorello/AFP/Getty Images)