Italy acts to calm the markets
Published 12/07/2011 | 18:12
Italy has acted to calm financial markets after two days of eurozone talks in Brussels.
An emergency meeting of EU leaders later this week was also on the cards amid continuing speculation about the spread of the euro's woes to Italy, and possibly Spain.
The eurozone ministers - joined by their non-eurozone counterparts, including Chancellor George Osborne - had been intending to be discuss a second Greek bail-out rather than talk down damaging speculation about the plight of the euro in Italy.
But all market attention was on Rome and the chances of the Italian parliament agreeing an austerity package this week - a move Prime Minister Silvio Berlusconi insisted would be enough to get a grip on debt reduction.
But his attack on the credentials of his own finance minister Giulio Tremonti was seen at least partly to blame for market jitters over Italy's financial state - because Mr Tremonti is seen as a steady hand at the tiller of the Italian Treasury.
This afternoon he flew back to Rome from Brussels, still visibly in his job despite fears that he would be sacked by Mr Berlusconi.
As markets fluctuated Mr Tremonti got on with the job of completing work on an austerity package involving an estimated £42 billion of savings - a deal Mr Berlusconi insisted would return Italian finances to "significant surplus", if endorsed by a majority of MPs.
Another meeting of EU leaders on the economic crisis, probably on Friday, would be designed to reassure jittery markets.
But the mere fact of more emergency talks threatened to worsen the volatile market response to what is seen as an escalating case of "contagion".
With one eye on the Italian situation, the eurozone ministers in Brussels assessed the details of another bail-out for Greece - considering even a partial default by the country involving bondholders extending credit deadlines to ease the Greek burden.