Economist Monti rushes to lead Italy out of debt crisis

Rome, Nov 15: Economist Mario Monti won lukewarm approval from still tense 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.

Monti 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 he is trying 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.

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 per cent at the start of trading and the euro climbed against the dollar.

Stocks later moved into negative territory in line with falls on other European stock markets. Borrowing costs on 10-year bonds fell to 6.352 per cent -- sharply below the 7.0-per cent 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 per cent -- was also lower than the rate on Friday of 6.437 per cent, although the level was still far higher than before the start of the political crisis.

PTI