Prime Minister Silvio Berlusconi’s offer to resign leaves Italy struggling to produce a new regime stable enough to implement painful austerity measures in a country that has averaged almost a government a year since World War II.
Italian stocks and bonds fell today on concern that a change in leadership won’t be enough to contain the turmoil in a nation with the euro-region’s second-biggest debt. European officials’ inability to tackle the sovereign crisis led to a surge in Italian bond yields in recent weeks that further frayed Berlusconi’s fractious coalition as top ministers bickered over how to protect the country from the contagion.
Bonds Decline
The yield on Italy’s 10-year bond surged 70 basis points to 7.47 percent as of 11:51 a.m. in London, and the five-year yield reached 7.7 percent; those levels drove Greece, Ireland and Portugal to seek international bailouts. LCH Clearnet SA, the French arm of Europe’s largest clearing house, said yesterday it would increase the extra deposit it demands from clients to trade all Italian government bonds and index-linked securities.
