Arab Today, arab today market nerves as monti rushes to save italy from crisis
Last Updated : GMT 06:50:22
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Arab Today, arab today

Market nerves as Monti rushes to save Italy from crisis

Arab Today, arab today

Arab Today, arab today Market nerves as Monti rushes to save Italy from crisis

Rome - AFP

Economist Mario Monti won lukewarm approval from still nervous markets on Monday as he rushed to form a new government within days to lead Italy out of an alarming debt crisis rocking the eurozone. The technocrat launched talks with political leaders set to conclude on Tuesday but has already won endorsements from Italy\'s main parties and big business since being nominated to replace prime minister Silvio Berlusconi. He is under intense pressure from the international community to fill the political vacuum in Rome and implement key economic reforms and according to newspaper reports is racing to forge the cabinet within 48 hours. \"Italy must again be and must increasingly be an element of strength, not weakness in a European Union that we helped found and in which we should be protagonists,\" the 68-year-old Monti said after his nomination on Sunday. He promised to move \"with urgency\" and push to boost Italy\'s growth. President Giorgio Napolitano said he hoped the new government would be approved with a confidence vote in parliament by the end of the week, warning that Italy faced a tight timetable to avoid a blow-up of its giant debt. Italian stocks jumped more than 2.0 percent at the start of trading and the euro climbed against the dollar, indicating approval of Monti. Stocks later moved into negative territory in line with falls on other European markets. Borrowing costs on 10-year bonds meanwhile fell to 6.352 percent -- sharply below the 7.0-percent warning threshold breached last week, easing fears that Italy may follow Greece, Ireland and Portugal in needing a bailout. The rate Italy was forced to pay in a 5-year bond sale on Monday -- 6.29 percent -- was also lower than the rate on Friday of 6.437 percent, although the level was still far higher than before the start of the political crisis. \"The results were reassuring,\" Jan von Gerich, chief analyst at Nordea Markets, told Dow Jones Newswires. \"However, still a couple of weeks ago such an auction yield would have looked like a disaster,\" he said. The toxic mix of a 1.9 trillion euro ($2.6 trillion) debt, an extremely low growth rate and high bond rates are keeping markets anxious. The Sole 24 Ore financial daily said the markets were very uneasy and \"any delay in forming the Monti government could be extremely dangerous.\" Von Gerich added: \"The sentiment remains fragile and even the slightest signs that Italy does not intend to do its utmost to reform its economy would likely be quickly illustrated in market prices.\" As European leaders watched nervously to see whether the markets would pick up again, German central bank chief Jens Weidmann said he was confident Italy would overcome its difficulties \"under its own strength.\" \"What is needed here is the political will,\" he added. Monti\'s nomination was immediately applauded on Sunday by European Union president Herman Van Rompuy and European Commission head Jose Manuel Barroso who hailed it as an \"encouraging signal\". Berlusconi, whose resignation after a wave of market panic was greeted by scenes of joy in the streets of Rome, also gave his backing to Monti but vowed a political comeback saying: \"I will not give up.\" The prime minister-designate officially has a maximum of 10 days within which to put together his government and has warned of \"lots of sacrifices\" ahead, said Francesco Nucara, a member of the Italian Republican Party, after meeting Monti. He is set to meet with Italy\'s powerful trade unions on Tuesday. Susanna Camusso, the head of the country\'s biggest union CGIL, said she would never allow a reform of labour laws to ease firings. She said she was open to negotiating pension reforms but not \"just to cash in.\" Italy\'s top business leader Emma Marcegaglia -- head of the Confindustria employers\' association -- said it was essential the government was formed soon to \"turn its hand to reforms which are fundamental for a return to growth.\" The national press hailed a \"change of an era\" but called on the upcoming technocratic government to ensure the economic reforms are fair. \"The fairer they are, the more acceptable they will be to Italians... and the bigger the government\'s majority will be,\" the Corriere della Sera said. International leaders including US President Barack Obama and French counterpart Nicolas Sarkozy are pushing hard for Italy to move quickly. The European Union, which together with the International Monetary Fund is now auditing Italy, has warned it may need to pass extra austerity measures.  

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