Why might the Italian city-states have resisted the exploration around the world? The discovery of new trade routes to the east threatened the city-state's control over that trade. The technological innovations that allowed new discoveries were adding to the wealth of Italy's enemies. The search for new Protestant converts threatened the power of the papal states and Rome itself. The Italian city-states were fearful that new trade routes would raise the influence of Islamic empires.
I'd probably go with the first choice -- that the discovery of new trade routes threatened their control over trade. The city-states, particularly those such as Venice, thrived on the profitable trade routes and arrangements they had in dealing with merchants coming in from the East through Muslim-held territories. Searching for a route that bypassed the Muslim empires and opened the door to India and China was part of that goal pursued by a number of nations such as Portugal. When Columbus set out on a similar mission and found the New World, he didn't realize that what it was and believed it to be part of Asia.
I would agree with the answer above mainly because it wraps all the possibilities up. The church would have been fearful about a spread of Protestantism and Islam.
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