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Italian political tumult hits parts of eurozone


Italy's President Sergio Mattarella

Italy's President Sergio Mattarella

AFP/Getty Images

Italy's President Sergio Mattarella

Chaos ruled Italian markets as the nation plunged deeper into political turmoil, with knock-on effects for other highly indebted euro area countries - including Ireland.

Italy's borrowing costs for two-year bonds surged to the highest level in four years yesterday - a holiday in much of Europe - while stocks slumped for a fourth day as President Sergio Mattarella asked economist Carlo Cottarelli to form a government.

The former IMF official will be a caretaker leader until new elections possibly next autumn, though he said yesterday he'd try to push that out till early 2019.

Earlier, Matteo Salvini, leader of the League which had been on the verge of forming a coalition with the Five Star Movement, said it made no sense for Italy to remain in the European Union unless the bloc rewrote its rules.

In response, markets ricochetted yesterday from early relief that euro sceptic economist Paolo Savona will not become Italy's finance minister and fear that the political impasse may plunge the eurozone's third biggest economy and largest borrower into an even bigger crisis. Italian assets initially surged early in the day after President Mattarella nominated Paolo Savona for finance minister.

Belfast Telegraph