By Gavin Jones and Giselda Vagnoni

ROME (Reuters) - Italy's economy minister warned on Thursday of shocks to financial markets if Republican candidate Donald Trump wins the U.S. presidential election this year, and said that a Trump presidency would hurt New York's appeal as a financial center.

In some of the strongest criticisms of Trump by one of Washington's G7 partners, Pier Carlo Padoan told Reuters that the economic consequences of Trump beating Democratic candidate Hillary Clinton in November would be: "Very bad. Period."

He said the billionaire real estate developer's rhetoric on issues such as trade and security was unnerving for markets.

"The message is more protectionism, more fragmentation, more aggressiveness and more separation in dealing with global security threats," Padoan said in an interview.

"All of this adds to instability and uncertainty and this translates into financial market shocks."

European governments have been largely measured in their comments on Trump, who wants a temporary ban on Muslims entering the United States, has criticized trade deals as tilted against U.S. interests and advocated raising import tariffs in response to very low interest rates in trading partners such as the EU.

However, Germany's economy minister said in March that Trump posed a threat to peace and prosperity. British Prime Minister David Cameron has cast him as "divisive, stupid and wrong" for proposing the temporary ban on Muslims.

Padoan said a Trump presidency would also harm New York's appeal as a financial center: "If I were the head of a major investment company I'd say, "Hmm, where should I go and work?"

If Trump were to win and Britain votes to leave the European Union at its June 23 referendum, Padoan said Paris could overtake London and New York as the West's main financial center.

A British vote to leave the EU would create economic damage for both Britain and its trade and investment partners, but would not trigger any sell-off of Italian government bonds, Padoan said.

"The flight to quality wouldn't be the usual sovereign risk story, it will be a financial risk story," he said. "Markets will ask where the next financial center will be located."

If Britain leaves the EU, London risks losing one of its top money spinners - the trade in trillions of euros in derivatives - and euro zone officials say the European Central Bank will push for the business to move inside the euro zone.

Padoan also played down the risk of a market crisis in Italy if voters should reject a proposed reform of the constitution in a referendum in October. Prime Minister Matteo Renzi has said he will resign if his reform proposals are thrown out.

"I hope not and I believe not," Padoan said, when asked if a "no" vote in Italy could trigger the kind of debt crisis that enveloped the country in 2011.

(Additional reporting by Stephen Adler; Writing by Gavin Jones; Editing by Mark Bendeich)