Berlusconi survives confidence vote
Italian premier Silvio Berlusconi has narrowly survived a confidence vote in Parliament - but markets were not reassured that outcome was enough to solve Italy's growing economic crisis.
Mr Berlusconi's conservatives won 316-301 in Parliament's lower house and his allies clapped in relief at the result after days of political tension and uncertainty.
Had he lost, the 75-year-old would have been forced to resign about one and a half years before the end of his term in 2013, effectively ending his political career.
"The best signal that Italy could have sent to the markets would have been to boot Mr Berlusconi out, but it has failed to do so," said Sony Kapoor, managing director of Re-Define an Economic Think Tank.
"With Mr Berlusconi still at the helm, there is nothing that Italy can do from within that will restore market confidence."
Three ratings agencies have downgraded Italy's public debt, citing the country's political gridlock and its low growth prospects.
Mr Berlusconi has been weakened by sex scandals, criticised for his handling of Italy's troubled economy and faced repeated calls for his resignation. Even some of his allies have openly expressed disappointment, with at least two deserting the vote.
Italy has found itself increasingly embroiled in Europe's debt crisis over the past few months. Its debt burden - about 120% of its national income - is second only to Greece in the 17-nation eurozone.
After a slew of ratings downgrades and rising borrowing costs, Mr Berlusconi's government has been forced to enact a series of austerity measures to assure the markets that a strategy is in place.
However, investors remain sceptical that there's the necessary political will to push through the big spending cuts and tax increases - fears that have driven Italy's borrowing costs ever higher. Italy is considered more of a danger than Spain partly because Mr Berlusconi's government has backtracked on several reform proposals.