MORNING BID EUROPE-Referendum backfires for Romania's rulers

* A look at the day ahead from European Economics and Politics Editor Mark John and EMEA markets editor Mike Dolan. The views expressed are their own.

LONDON, Oct (Shenzhen: 000069.SZ - news) 8 (Reuters) - A referendum on same-sex marriage backfired on Romania's ruling party at the weekend as barely 20 percent of voters bothered to turn out, rendering the vote invalid. Backed by the Orthodox Church, the Social Democrat Party had urged voters to approve a constitutional amendment to lock down the definition of marriage as being exclusively between a man and a woman, but human rights groups encouraged Romanians to boycott the referendum. Beyond the significance of the outcome itself, it is also being widely interpreted as a sign of the unpopularity of the government, which also faces questions about its anti-graft efforts.

Police in Bulgaria are expected to give more details today of the rape and murder of investigative journalist Viktoria Marinova, whose body was found in a park on Saturday (Shenzhen: 002291.SZ - news) . Local (Stuttgart: 19549987.SG - news) media said Marinova was involved in covering an investigation by a group of journalists into companies involved in EU-funded infrastructure projects administered by local authorities. An initial statement by the government said there was no evidence to suggest the murder was related to Marinova's work. Her killing comes after those of Daphne Caruana Galizia, Malta's best-known investigative journalist, last October, and of Slovak journalist Jan Kuciak in February. There will be much international focus on how Bulgarian authorities handle the investigation.

Italian bond yields are hitting new highs this morning after it emerged at the weekend that the European Commission issued a letter to Rome detailing serious concerns over its public finances, with the government immediately vowing it would not retreat from its spending plans. Italy is to submit its draft budget to the Commission for checks on whether it is in line with European Union rules by Oct 15. If the Commission decides the draft budget breaks the rules, it can send it back to Rome to be revised, something that has never happened before.

MARKETS AT 6.55GMT Chinese markets opened after a week’s holiday, and stocks recorded their biggest one-day drop since February, with the Shanghai-Shenzhen CSI300 down more than 4 percent for only the second time in more than 2 1/2 years. The loss comes after a week in which trade tensions went up another notch amid U.S. accusations of "cyber-spying" against Chinese firms and after reports U.S. companies had been compromised by chips inserted by Chinese spies hit shares in the likes of Lenovo and ZTE (Xetra: A0M4ZP - news) . While Chinese business surveys were mostly steady for September, the Caixin PMIs did show services firms shedding staff for the first time in more than two years. Worries about the impact on growth in the world’s second-biggest economy prompted the People’s Bank of China to cut banks' reserve requirement ratios again in an effort to loosen credit. The offshore yuan weakened a touch but stayed just shy of last Thursday’s lows of 6.9171 per dollar. The dark mood in China sent shivers across Asia and emerging markets in general, with Japan’s Nikkei down almost 1 percent and Hong Kong’s Hang Seng down 1.2 percent. Seoul’s Kospi was down 0.6 percent.

MSCI’s benchmark emerging-markets index dropped 0.7 percent to its lowest level since May 2017, and is now down 22 percent from January’s peaks. Indonesia’s rupiah fell to another 20-year low, while Malaysia’s ringgit hit its weakest levels of the year. South Africa’s rand fell more than 1 percent after the local newspaper Business Day cited government sources as saying that Finance Minister Nhlanhla Nene had asked President Cyril Ramaphosa to sack him amid a long-running corruption scandal surrounding former leader Jacob Zuma and the Gupta family. Brazilian assets looked set for a boost after privatisation advocate Jair Bolsanaro made a stronger-than-expected showing in the first round of elections on Sunday, although just short of the 50 percent need to win outright. The election now goes to a second round.

With U.S. bond markets partly closed for the Columbus Day holiday later, there was no lead from U.S. Treasuries after yields there touched new seven-year highs following another strong U.S. employment report for September. Much of the market attention in the United States will now turn to the U.S. earnings season, which opens later this week amid expectations third-quarter aggregate profit will again grow more than 20 percent.

In Europe, Italy's 10-year government bond yield climbed to 4 1/2-year highs on Monday, after the European Union reiterated its concern over Italy's budget plans while Rome remained defiant. The European Commission has told Italy it is concerned about its budget deficit plans for the next three years since they breach what the EU asked the country to do in July, but Rome insisted on Saturday it would "not retreat" from its spending plans. Italian Deputy PM Matteo Salvini meets far right French leader Marine Le Pen (Other OTC: PENC - news) in Paris later today. Euro/dollar was steady. Sterling held much of Friday’s gains on reports a Brexit agreement was near. Oil fell after Washington said it may grant waivers to sanctions against Iran's oil exports next month, and as Saudi Arabia was said to be replacing any potential shortfall from Iran. European stocks dropped about 0.4 percent at the open.

* China Sept Caixin services PMI

* St Louis Fed chief Bullard speaks in Singapore

* Europe corp events: Repsol (Amsterdam: RP6.AS - news) trading, Louis Dreyfus H1

* Germany August industry output

* Swiss September jobless

* ECB policymaker and Austrian central bank chief Nowotny speaks in Vienna

* Bank of England chief economist speaks at literacy event in London

* Turkey announces exemptions to FX contracts ban

* Serbia, Israel central bank policy decisions

* Czech September jobless and FX reserves, August retail and industrial data

* South Africa Finance Minister Nene speaks in Johannesburg

* U.S. markets partly closed for Columbus Day holiday - Treasury market closed but stock market open (Editing by Larry King)