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Italy’s deepening political crisis has impacted the financial markets.
The Italian market fell more than 2% and the euro fell to the lowest level since June against the Swiss Franc.
Italy’s 10-year bond yield – an indication of how much the government has to pay to borrow money – rose as high as 4.66%, the highest level in more than 3 months.
PM Enrico Letta plans to hold a confidence vote on Wednesday, to seek the backing of Italy’s parliament.
PM Enrico Letta plans to hold a confidence vote on Wednesday after five ministers from Silvio Berlusconi’s party stepped down
Enrico Letta was forced to make that move after five ministers from Silvio Berlusconi’s party stepped down at the weekend.
But those ministers have now given mixed signals as to whether they are actually leaving the government.
The crisis follows weeks of worsening ties between Silvio Berlusconi’s party and Enrico Letta’s grouping.
Silvio Berlusconi’s People of Freedom (PDL) objects to a planned increase in sales tax, which is part of wider government policy to reduce big public debts.
The Italian economy is in a dire state.
It is forecast to shrink by 1.4% this year according to the national statistics agency.
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Italian President Giorgio Napolitano is considering ways out of an acute political crisis after ex-PM Silvio Berlusconi’s ministers left the coalition government.
Giorgio Napolitano hinted that he would try to oversee the formation of a new coalition without calling elections.
This follows weeks of worsening ties between Silvio Berlusconi’s party and PM Enrico Letta’s centre-left grouping.
Silvio Berlusconi had already threatened to withdraw his ministers if he was expelled from the Senate for tax fraud.
The current coalition government was put together after inconclusive elections in February, and the latest developments cast a further shadow over Italy’s struggling economy, the eurozone’s third-largest.
It is feared that the crisis could hamper efforts to enact badly-needed reforms to tackle Italy’s economic problems, including debt, recession and high youth unemployment.
The IMF has warned that coalition tensions represent a risk to the Italian economy.
Italian President Giorgio Napolitano is considering ways out of an acute political crisis after ex-PM Silvio Berlusconi’s ministers left the coalition government
Speaking on Saturday, Giorgio Napolitano called for political continuity in the country.
“We need a parliament that discusses and works, not that breaks up every now and then,” he said.
“We do not need continuous election campaigns, we need continuity of the government’s actions, decisions and its measures to resolve the problems of this country.”
Later on Sunday, Giorgio Napolitano is expected to meet Enrico Letta, and their talks will be closely watched for the first indications as to how this crisis will play out.
Enrico Letta, of the centre-left Democratic Party, warned late on Friday that he would quit unless his coalition cabinet won a confidence vote due next week.
Silvio Berlusconi pre-empted that, describing Enrico Letta’s comments as “unacceptable”. He later said all five ministers of his People of Freedom (PDL) party were resigning.
The PDL is objecting to a planned increase in sales tax, which is part of wider government policy to reduce big public debts.
Interior Minister and PDL Secretary Angelino Alfano accused Enrico Letta of “a grave violation of the pacts that this government is founded on”.
But the prime minister responded angrily to the resignations, accusing the PDL leader of telling Italians a “huge lie” in using the sales tax as an alibi for his own personal concerns.
“In parliament, everyone will have to assume responsibility for their actions before the nation.”
Silvio Berlusconi’s legal problems are seen as a cause of much of the tension inside the coalition.
A committee of the Senate decides next week if he should be expelled after the Supreme Court recently upheld his conviction for tax fraud.
It was his first conviction to be confirmed on appeal in two decades of fighting legal cases.
Silvio Berlusconi was sentenced to a year in jail, but is expected to serve house arrest or community service because of his age.
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Italy’s PM Enrico Letta has threaten to resign unless his cabinet gets clear backing in a parliamentary vote expected to be called next week.
Enrico Letta’s warning came after the government failed to approve key budget measures.
His government is an unstable coalition between his party and that of ex-PM Silvio Berlusconi.
Silvio Berlusconi could lose his Senate seat after his fraud conviction. His backers say they would leave the cabinet in protest.
“I have no intention of limping along or being the subject of continuous threats,” Enrico Letta said in a statement after the government meeting late on Friday.
“Either we go forward, and the interests of the country and citizens are put first, or this experience ends here.”
PM Enrico Letta has threaten to resign unless his cabinet gets clear backing in a parliamentary vote expected to be called next week
Two government ministers said that Enrico Letta was now planning to call a confidence vote in parliament next week.
The cabinet is close to collapse just at a time when Italy desperately needs political stability if it is to begin to emerge from its long economic crisis.
If Silvio Berlusconi’s PDL pulled out of the government, it would lead to snap elections.
President Giorgio Napolitano and business leaders have warned against new polls while is still mired in recession, saying they could reignite fears about the country’s stability and financial position.
According to a 2012 anti-corruption law, Silvio Berlusconi should be ejected from the upper house after the Supreme Court last month upheld his fraud conviction.
After a party meeting on Wednesday, Silvio Berlusconi’s MPs threatened to resign en masse if the Senate votes next week o expel their mentor.
The Italian news agency Ansa cited sources who said PDL members were already writing out their resignations and threatening to hand them in to the party whips.
Silvio Berlusconi has been sentenced to a year in prison, but because of his age is expected to serve house arrest or community service.
It was his first conviction to be confirmed on appeal in two decades of fighting legal cases.
Last week Silvio Berlusconi vowed to stay in politics even if he lost his place in the Senate.
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Silvio Berlusconi has broadcast an angry video message after his jail sentence for tax fraud was upheld by Rome’s Court of Cassation, the country’s highest court.
Italy’s former PM Silvio Berlusconi said he was the innocent victim of “an incredible series of accusations and trials that had nothing to do with reality”.
The court also ordered a further judicial review on whether Silvio Berlusconi should be banned from holding public office.
Silvio Berlusconi, 76, is unlikely to go to jail because of his age.
While he is expected to serve out his sentence as house arrest, Silvio Berlusconi has the option of asking to do community service instead, with the deadline for the application not expected to fall until mid-October.
The ruling by Rome’s Court of Cassation, against which he cannot appeal, came after a three-day hearing. Silvio Berlusconi was not in court.
In an emotional nine-minute video, Silvio Berlusconi denounced the decision as “based on nothing, and which deprives me of my freedom and political rights”.
“No-one can understand the onslaught of real violence that has been directed against me following an incredible series of accusations and trials that don’t have any foundation in reality,” he said.
He described the more that 50 court cases he has faced as “genuine judicial harassment that is unmatched in the civilized world”.
Silvio Berlusconi has broadcast an angry video message after his jail sentence for tax fraud
“In exchange for the commitments I have made over almost 20 years in favor of my country and coming almost at the end of my public life, I have been rewarded with accusations and a verdict that is founded on absolutely nothing, that takes away my personal freedom and my political rights.”
Silvio Berlusconi criticized the country’s judicial record, saying: “Is this the Italy that we want? Is this the Italy that we love? Absolutely not.”
It is the billionaire businessman’s first definitive conviction after decades of criminal prosecutions.
The case concerns deals that his firm Mediaset made to purchase TV rights to US films.
Silvio Berlusconi was sentenced to four years in prison at the conclusion of the trial in October last year, though this was automatically reduced to a year under a 2006 pardon law.
The court at the time heard that he and other executives had bought TV rights at inflated prices to avoid paying taxes.
He was labeled the “author of a whole system of tax fraud”.
The review of the lower court’s five-year ban on holding public office means Silvio Berlusconi can remain as a senator and as leader of his centre-right People of Freedom Party (PDL) for now.
Silvio Berlusconi’s political grouping forms part of Italy’s coalition government. Prime Minister Enrico Letta needs both the PDL and his own centre-left Democratic Party to govern.
In a statement after the court ruling, Enrico Letta urged “a climate of serenity” for the good of the country.
Italian President Giorgio Napolitano also urged the country to stay calm.
Silvio Berlusconi’s legal team said there were “solid reasons” why Berlusconi should have been acquitted, and it would “evaluate and pursue any useful initiative, also in Europe, to make sure that this unjust sentence is radically reformed”.
Anti-establishment politician Beppe Grillo welcomed the court ruling, comparing the sentence to the fall of the Berlin Wall.
In a statement on his blog, Beppe Grillo said Berlusconi had “polluted, corrupted and paralyzed Italian politics for 21 years”.
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Rome’s Court of Cassation has upheld a prison sentence given to former Italian Prime Minister Silvio Berlusconi for tax fraud.
When he was convicted last October, Silvio Berlusconi was sentenced to four years in prison but this was automatically reduced to a year under a 2006 pardon law.
Silvio Berlusconi faces house arrest or community service instead of going to jail because of his age – he is 76.
However, the court ordered a review of a five-year ban on public office that was part of the original sentence.
It is Silvio Berlusconi’s first definitive conviction in up to 30 court cases on a variety of charges.
The ruling by Rome’s Court of Cassation came after a three-day hearing.
Rome’s Court of Cassation has upheld a prison sentence given to Silvio Berlusconi for tax fraud
The judicial review of the five-year ban from public office will enable Berlusconi to remain as a senator and as leader of his centre-right People of Freedom Party (PDL) for now.
It is a devastating judgement against the former prime minister, although he will be relieved that judges ordered a review of the political ban.
Silvio Berlusconi’s party is one half of Italy’s coalition government: Prime Minister Enrico Letta needs both the PDL and his own centre-left Democratic Party to govern.
Italian President Giorgio Napolitano issued a statement after the court ruling, urging the country to stay calm.
“The country needs to rediscover serenity and cohesion on vitally important institutional matters which have for too long seen it divided and unable to enact reforms,” he said.
The original ruling said that Silvio Berlusconi’s Mediaset media empire had inflated the price it had paid for film distribution rights to avoid paying taxes.
He was labeled the “author of a whole system of tax fraud”.
The three-time prime minister and senator has faced a string of trials since leaving office in November 2011.
Appeals are pending in other cases in which he was convicted of having paid for s** with an underage prostitute, and arranging for a police wiretap to be leaked and published in a newspaper.
Two other alleged tax evasion cases, one of them involving British lawyer David Mills, expired under the statute of limitations.
Silvio Berlusconi accuses magistrates from his home city of Milan of pursuing a “vendetta” against him.
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Former Italian PM Silvio Berlusconi has been found guilty of having intimate relationship with underage Karima El Mahroug, and abusing the power of his office.
Silvio Berlusconi, 76, has been sentenced to seven years in jail and banned from public office, pending the outcome of an appeal.
Silvio Berlusconi has been found guilty of having intimate relationship with underage Karima El Mahroug
The former prime minister and media tycoon had denied all the allegations against him.
In this latest court ruling, he was found guilty of paying for intimate relationship with a Moroccan girl, Karima El Mahroug, known as “Ruby the Heart Stealer”, who was just 17 at the time.
The judgement could have major political repercussions for Italy, analysts say.
They say a guilty ruling could weaken current PM Enrico Letta’s coalition government, which depends on the support of Silvio Berlusconi’s centre-right party, People of Freedom (PdL).
But Silvio Berlusconi will not have to spend any time in jail unless a lengthy appeals process is exhausted.
Silvio Berlusconi is already embroiled in several other court cases and was given a four-year sentence for tax fraud in October 2012.
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“Ruby” Karima El-Mahroug, the dancer alleged to have had paid s** as a minor with Italy’s ex-Prime Minister Silvio Berlusconi told a court that she had lied to investigators in 2010.
Karima El-Mahroug said she had “made up” details about er***c parties held at his villa while Silvio Berlusconi was still Italy’s prime minister.
She was testifying at the trial of three former Silvio Berlusconi aides accused of soliciting prostitutes for him.
Silvio Berlusconi is being tried separately on charges of paying for underage s** with Karima El-Mahroug.
Both the dancer and Silvio Berlusconi have denied the allegations.
Karima El-Mahroug is not charged with any crime in either case and is formally recognised in both as an injured party.
On Friday, Karima El-Mahroug appeared as a witness at the trial of TV presenter Emilio Fede, celebrity agent Lele Mora and Nicole Minetti, a local councilor and former showgirl.
They are accused of providing prostitutes for Silvio Berlusconi’s so-called “bunga-bunga” party evenings.
Karima El-Mahroug, known as “Ruby the Heart Stealer”, told the court she had lied about receiving 187,000 euros from Silvio Berlusconi for attending several of his parties.
She said she “made up” the sum to show off.
“Ruby” Karima El-Mahroug told a court that she had lied to Silvio Berlusconi case investigators in 2010
The dancer also went back on testimony that young women had bathed n**ed at Silvio Berlusconi’s residence, saying they had only stripped off to their lingerie and there had been “no contact” with the ex-PM.
“I am sorry I talked nonsense when I spoke to prosecutors,” said Karima El-Mahroug who is thought to have been aged 17 when she went to the parties.
“The majority of the things I said were not true.”
Prosecutors are expected to make their closing statements on May 31.
Meanwhile, a verdict in Silvio Berlusconi’s trial on charges of sleeping with an underage prostitute is due on June 24.
Earlier this week, a prosecutor who requested a six-year sentence and a lifelong ban from office, said she received threats including a letter with two bullets.
Silvio Berlusconi already faces a four-year prison sentence and five-year ban from public office for a fraud conviction.
He is expected to appeal against the verdict to Italy’s highest court, the Court of Cassation.
Earlier this month Italian prosecutors requested a new corruption trial against Silvio Berlusconi, saying he had allegedly bribed a left-wing senator to defect to his right-wing People of Freedom party (PDL) in 2006.
Silvio Berlusconi claims he is the victim of a campaign by left-wing magistrates.
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Thousands of protesters, led by trade unionists, have rallied in Rome against the policies of Italy’s new coalition government.
Wielding red flags and placards, they urged the centre-left prime minister, Enrico Letta, to scrap austerity measures and focus on job creation.
Public trust in his fragile coalition with the centre-right is dropping, opinion polls suggest.
Italy is experiencing its longest recession in more than 40 years.
National debt is now about 127% of annual economic output, second only to Greece in the eurozone.
Unemployment is at a record high of 11.5% – 38% for the under-25s.
Before taking office, Enrico Letta vowed to make job creation his priority, but critics are unhappy that he has focused on property tax reform.
The issues of social justice and poverty came up when German Chancellor Angela Merkel had talks with the new Pope, Francis, at the Vatican on Saturday.
Organized by the metalworkers’ union FIOM and the CGIL union, Saturday’s peaceful march and rally drew supporters from across Italy. The turnout was unclear but 50,000 people had been expected to attend.
“We ask the government to change [former Prime Minister Mario] Monti’s and [former Prime Minister Mario Silvio] Berlusconi’s politics,” said Maurizio Landini, leader of the FIOM.
“If they don’t change, as the country asked for with its vote, we are going nowhere.”
A controversial poster depicted Chancellor Angela Merkel, who is seen as typifying austerity
One of the protesters, Enzo Bernardis, told Reuters news agency: “We hope that this government will finally start listening to us because we are losing our patience.”
Soon after being appointed, Enrico Letta met other eurozone leaders to convey growing public unrest over austerity measures in Italy.
But the new prime minister has to maintain a delicate balance between the policies of his own supporters and those of the centre-right, led by Silvio Berlusconi.
Italy’s coalition was only formed after two months of post-election deadlock.
Among the demonstrators in Rome were radical leftists.
A controversial poster depicted Chancellor Angela Merkel, who is seen as typifying austerity, in mock-Nazi uniform.
On Thursday, Pope Francis said in a speech that the global economic crisis had made life worse for millions in rich and poor countries.
Speaking after her private meeting with the pontiff, Angela Merkel told reporters: “Crises have blown up because the rules of the social market have not been observed…
“It is true that economies are there to serve people and that has by no means always been the case in recent years.”
Angela Merkel said she and Pope Francis had spoken mainly about globalization, the European Union and the role of Europe in the world.
“Pope Francis made it clear that we need a strong, fair Europe and I found the message very encouraging,” she added.
While she is not a Catholic herself, Angela Merkel, the daughter of a Lutheran minister, leads a party with a strong Catholic component.
Former Italian PM Silvio Berlusconi’s conviction for tax fraud has been upheld by an appeals court in Milan.
The court also reinstated a four-year prison sentence and five-year ban from public office Silvio Berlusconi was handed in October.
Silvio Berlusconi was convicted of artificially inflating prices of film distribution rights bought by his company, Mediaset, to avoid taxes.
He is now expected to appeal against Wednesday’s ruling at Italy’s highest court, the Court of Cassation.
Silvio Berlusconi, 76, has denied the charges and said they are politically motivated.
But instead of overturning October’s verdict, the Milan appeals court on Wednesday upheld his conviction for tax evasion and re-instated the original jail sentence. The four-year term had been cut to one year by a lower court because of his age.
Silvio Berlusconi’s conviction for tax fraud has been upheld by an appeals court in Milan
“We knew it would go like this,” Silvio Berlusconi’s defense lawyer Niccolo Ghedini told reporters.
There is however no real prospect of Silvio Berlusconi being jailed, as he will exercise his right to appeal and the case will actually soon expire under a time limit.
Nevertheless, this is another major legal blow for Silvio Berlusconi, whose People of Freedom (PdL) party is part of Italy’s new coalition government.
In the eyes of the law Silvio Berlusconi is a convicted fraudster, but he will argue as he always does that all his legal troubles are the simply the work of his political enemies – left-wing elements in the judiciary.
In March, silvio Berlusconi was sentenced to a year in jail after being convicted of arranging for a police wiretap concerning a political rival to be leaked and published in a newspaper run by his brother. He denied the charges and is expected to appeal.
Silvio Berlusconi is also currently on trial for allegedly paying for sex with an underage prostitute, and later abusing his powers by putting pressure on the police to release her from custody. He has admitted sending her money, but insists the funds were meant as a gift.
In other trials over the years, Silvio Berlusconi has been accused of charges including accounting fraud, perjury, bribery and corruption. He has denied all the accusations against him and has either been acquitted or let off under statutes of limitations.
Silvio Berlusconi’s trials:
- Accused of paying for sex with an underage prostitute: Verdict due
- Convicted and sentenced to a year in jail for arranging leak of police wiretap
- Accused of tax fraud over deals his firm Mediaset made to purchase TV rights to US films: Convicted in October 2012; Sentence upheld by appeals court in May
- Two other corruption cases involving tax evasion and bribery of a British lawyer: Expired under statute of limitations
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Michaela Biancofiore, an Italian junior equal opportunities minister, has resigned the day after being sworn in to new coalition, having said gay people invited discrimination by “ghettoizing” themselves.
Michaela Biancofiore was defending herself against accusations of homophobia made by human rights groups.
But she invoked more wrath with Saturday’s comments to Italian media.
The sacking is an upset for Italian PM Enrico Letta’s one week old left-right coalition, analysts say.
On Friday, Enrico Letta, the Democratic Party deputy leader (PD), warned ministers in the fledgling government to work together and maintain “sobriety” when talking to the media.
Michaela Biancofiore is a member of Italy’s ex-PM Silvio Berlusconi’s centre-right People of Freedom party
Michaela Biancofiore, a member of ex-PM Silvio Berlusconi’s centre-right People of Freedom party (PDL), has been redeployed to the civil service ministry.
She says she supports “civil unions” to protect gay couples but opposes gay marriage.
But Saturday’s Italian newspapers quoted her as saying: “For once, I would like to see gay associations, instead of <<ghettoizing>> themselves… say something to condemn the recent spate of killings of women [in Italy]… All they do is defend their own interests.”
Enrico Letta’s new coalition is proving as fragile as forecast, because old political enemies of left and right are finding it difficult to work together as a team.
Silvio Berlusconi, who is not a member of the new government, but who remains an influential political player, is trying to dictate terms and conditions under which the new coalition must operate.
Political observers say at any minute Silvio Berlusconi could force new elections by withdrawing the support of his party from the hybrid coalition.
Friday’s swearing-in of the new government at Rome’s presidential Quirinale Palace signaled the end of two months of political deadlock.
Since February’s inconclusive poll there has been political stalemate in Italy, which is still plagued by economic woes after becoming one of the first eurozone victims of the global financial crisis of 2008.
A man has been arrested in Italy after he shot two police officers outside the PM’s office in Rome during new government swearing-in ceremony.
One of the officers was shot in the neck and is said to be in a serious condition.
The incident was around a kilometre away from the swearing-in ceremony at the Quirinal Palace.
Democratic Party Deputy Leader (PD), Enrico Letta, becomes prime minister at the head of a “grand coalition” including Silvio Berlusconi’s People of Freedom party (PDL).
The swearing-in signals the end of two months of political deadlock.
Correspondents say the “grand coalition” between Italy’s current main right- and left-wing parties is unprecedented, and will probably prove an uneasy alliance.
A man has been arrested in Italy after he shot two police officers outside the PM’s office in Rome during new government swearing-in ceremony
Silvio Berlusconi had said he would not be a minister, but had pushed for leading figures from his party to be given top posts.
Angelino Alfano, the PDL’s secretary and one of Silvio Berlusconi’s closest political allies, is deputy prime minister and interior minister in the new government.
Among the other key appointments is Bank of Italy director general Fabrizio Saccomanni to head the powerful economy ministry.
The cabinet is to have more women than usual, including former European Commissioner Emma Bonino as foreign minister.
Other women given government jobs include Olympic kayaker Josefa Idem who becomes minister of equal opportunity and sports, and Anna Maria Cancellieri at the ministry of justice.
Since February’s inconclusive poll there has been political stalemate in Italy, which is still plagued by economic woes after becoming one of the first eurozone victims of the global financial crisis of 2008.
President Giorgio Napolitano said on Saturday that the government would have the support of both chambers of parliament.
“I hope that this government can get to work quickly in the spirit of fervent co-operation and without any prejudice or conflict,” the president said.
“It was and is the only possible government.”
President Giorgio Napolitano, who is serving an unprecedented second term in Italy, has suggested he might resign if the new government fails to enact reforms.
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A deal on the formation of a new government has been reached in Italy, ending two months of political deadlock since the general election.
The agreement was announced after Prime Minister-designate Enrico Letta met President Giorgio Napolitano.
The coalition brings together Enrico Letta’s Democratic Party (PD) and the People of Freedom party (PDL) of former PM Silvio Berlusconi.
The swearing-in is to take place on Sunday at 11:30 local time.
Silvio Berlusconi had said he would not be a minister, but had pushed for leading figures from his party to be given top posts.
Angelino Alfano, the PDL’s secretary, will become deputy prime minister and interior minister in the new government.
Among the other key appointments proposed, Bank of Italy director general Fabrizio Saccomanni will head the powerful economy ministry and former European Commissioner Emma Bonino will become foreign minister.
Italian Prime Minister-designate Enrico Letta has agreed new government ending two months of political deadlock
The formation of the new government brings to an end a political deadlock that has unnerved financial markets since February’s inconclusive election.
President Giorgio Napolitano said the government would have the support of both chambers of parliament.
“I hope that this government can get to work quickly in the spirit of fervent co-operation and without any prejudice or conflict,” he said.
“It was and is the only possible government.”
The new government has to deal with a rapidly declining economic situation, rising unemployment – particularly among under the 35s – and lack of growth, despite some draconian austerity measures passed by the previous government of technocrats.
Enrico Letta, 46, is considered a moderate within the PD and is linked to Silvio Berlusconi through his uncle, Gianni Letta, who is one of Berlusconi’s closest aides.
Silvio Berlusconi is still contesting charges of tax fraud and sex with an underage prostitute, but recent opinion polls suggest his popularity has increased, giving him greater bargaining power.
Enrico Letta expressed “sober satisfaction over the team we put together”.
He has said he will shift the focus away from austerity to resolve Europe’s economic problems.
Enrico Letta’s candidacy for prime minister emerged after the PD leader, Pier Luigi Bersani, announced his resignation following a party rebellion over his choice for Italian president and his refusal to work with Silvio Berlusconi.
The third strongest force to emerge from the Italian election, the Five Star movement led by former comedian, Beppe Grillo, has refused to take part in a coalition with the two main parties.
He likened such a coalition to “an orgy worthy of the best of bunga bunga” in a barb directed at Silvio Berlusconi’s renowned private parties.
President Giorgio Napolitano, who is serving an unprecedented second term, has suggested he might resign if a new government fails to enact reforms.
Italian government – proposed posts:
- Enrico Letta, 46: Prime minister
- Angelino Alfano, 42: Deputy PM and interior minister
- Fabrizio Saccomanni, 70: Economy minister
- Emma Bonino, 65: Foreign minister
- Anna Maria Cancellieri, 69: Justice minister
- Enrico Giovannini, 55: Labour minister
- Mario Mauro, 51: Defence minister
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Enrico Letta appears set to become Italy’s new prime minister, after being asked by President Giorgio Napolitano to form a broad coalition government.
The appointment of Enrico Letta, currently deputy leader of the centre-left Democratic Party, could see the end of two months of parliamentary deadlock.
An inconclusive general election in February left the country in political limbo.
Enrico Letta, 46, said he would aim to change the course in Europe on austerity.
“European policies are too focused on austerity which is no longer enough,” he said, following the closed-door meeting with the president in Rome.
He also said he had accepted the post knowing that it was an enormous responsibility and that Italy’s political class “has lost all credibility”.
Enrico Letta must now form a cabinet that can win cross-party support and a vote of confidence in parliament, possibly this weekend.
Factions from across the political spectrum, including former PM Silvio Berlusconi’s right-wing People of Freedom Party (PDL), have indicated that they are ready to form a coalition under a figure like Enrico Letta.
However, Silvio Berlusconi’s party and the Democratic Party (PD) differ on a number of issues.
Enrico Letta appears set to become Italy’s new prime minister, after being asked by President Giorgio Napolitano to form a broad coalition government
PDL National Secretary Angelino Alfano warned that his group would not take part in a government unconditionally.
Enrico Letta, once a member of the former centre-right Christian Democrats, is seen as moderate of the left. His uncle, Gianni Letta, has been Silvio Berlusconi’s chief-of-staff for 10 years.
A broad political alliance would again make Silvio Berlusconi a major influence.
This awkward coming together of bitter rivals is seen as the only way to end the parliamentary stalemate and put an administration in place.
But it is a forced political marriage that may not last long.
Enrico Letta’s candidacy for prime minister came about after the PD leader, Pier Luigi Bersani, announced his resignation last week.
He had ruled out working with Silvio Berlusconi and faced a party rebellion over his choice for Italian president.
The third strongest political force to come out of February’s election, former comedian Beppe Grillo’s Five Star movement, could not be persuaded to join a coalition and is expected to be in opposition.
With the Italian economy still struggling, the new government will be expected to try to implement a limited range of economic and institutional reforms.
Among its priorities will be an effort to re-shape the current election law. The aim would be to ensure that future general elections would deliver more emphatic, clear-cut results.
Enrico Letta’s appointment follows the swearing-in on Monday of President Giorgio Napolitano, who berated his country’s feuding politicians.
Taking up an unprecedented second term, he told the assembled MPs that they had been guilty of a long series of failings and that their inability to implement key reforms had been “unforgivable”.
Giorgio Napolitano has threatened to resign if no administration is formed.
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President Giorgio Napolitano has asked a select group of people to offer a policy platform to end the impasse in forming a new government in Italy.
Giorgio Napolitano named 10 “wise men” to work in two separate groups.
The president’s announcement ended speculation that he might resign – a day after political parties failed to agree a coalition government following February’s inconclusive election.
Giorgio Napolitano said he would serve out his mandate that ends on May 15.
Giorgio Napolitano named 10 “wise men” to work in two separate groups to end the impasse in forming a new government in Italy
Italy has been governed by a group of technocrats led by Mario Monti since late 2011 – when centre-right leader Silvio Berlusconi resigned in the middle of an acute economic crisis.
Giorgio Napolitano said that Mario Monti’s caretaker cabinet was still “operational” and “in charge”.
However, the continuing political stalemate is delaying reforms that could help revive Italy’s recession-hit, debt-laden economy.
Giorgio Napolitano finished consultations with Italy’s main political leaders on Friday.
In the absence of agreement, he said he asked “two small groups of personalities” to formulate “precise programme proposals” that could be supported by political parties – and serve as a basis for a new cabinet.
The first group will be asked to work on pressing political and institutional issues, while the second will focus on economic and social problems.
Among the 10 “wise men” are Enrico Giovannini, head of Italy’s Istat statistics agency, European Affairs Minister Enzo Moavero Milanesi, Bank of Italy deputy director Salvatore Rossi and Valerio Onida, a former judge on the country’s constitutional court.
“I want to underline one more time the need for all political parties to demonstrate their full awareness of the gravity and urgency of the problems facing the country,” Giorgio Napolitano said.
Italy’s parliament is currently split in three main blocs – each without enough seats to govern alone.
Pier Luigi Bersani’s centre-left coalition won the most votes in the February election, but failed to secure a majority in both houses of parliament.
The bloc has ruled out an alliance with Silvio Berlusconi’s centre-right alliance, which finished a close second.
The protest group Five Stars Movement led by former comedian Beppe Grillo garnered a quarter of the vote, but has refused to support either group.
Italy’s 10 “Wise Men”:
- Political and institutional reform group
- Prof. Valerio Onida – University of Milan constitutional law expert
- Luciano Volante – former parliament speaker from Pier Luigi Bersani’s party
- Mario Mauro – senator in Mario Monti’s party
- Gaetano Quagliariello – senator in Silvio Berlusconi’s party
- Economic and social reform group
- Prof. Enrico Giovannini – statistics agency head
- Giovanni Pitruzzella – Competition Authority head
- Salvatore Rossi – Bank of Italy deputy head
- Enzo Moavero Milanesi – European Affairs minister
5-6. Giancarlo Giorgetti and Filippo Bubbico – parliament commission heads
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Italy’s President Giorgio Napolitano has said he will ask a select group of people to offer a policy platform to try to end the impasse in forming a new government.
Giorgio Napolitano said the names would be released later on Saturday.
The president’s announcement ended speculation that he might resign – a day after political parties failed to agree a coalition government following February’s inconclusive election.
Giorgio Napolitano said he would serve out his mandate that ends on May 15.
Italy’s President Giorgio Napolitano has said he will ask a select group of people to offer a policy platform to try to end the impasse in forming a new government
Italy has been governed by a group of technocrats led by Mario Monti since late 2011 – when centre-right leader Silvio Berlusconi resigned in the middle of an acute economic crisis.
President Napolitano said that Mario Monti’s caretaker cabinet was still “operational” and “in charge”.
However, the continuing political stalemate is delaying reforms that could help revive Italy’s recession-hit, debt-laden economy.
Giorgio Napolitano finished consultations with Italy’s main political leaders on Friday.
In the absence of agreement, Italian analysts had said Giorgio Napolitano was contemplating quitting to enable a successor to try to form a new cabinet or dissolve parliament and call new elections.
However, Giorgio Napolitano said he planned to stay on “to the end”.
He was, instead, going to ask “two small groups of personalities” to formulate “precise programme proposals” that could be supported by political parties – and serve as a basis for a new cabinet.
“I want to underline one more time the need for all political parties to demonstrate their full awareness of the gravity and urgency of the problems facing the country,” Giorgio Napolitano said.
There has been talk of the possibility of the president ultimately seeking to form a temporary, technocrat-style administration.
Italy’s parliament is currently split in three main blocs – each without enough seats to govern alone.
Pier Luigi Bersani’s centre-left coalition won the most votes in the February election, but failed to secure a majority in both houses of parliament.
The bloc has ruled out an alliance with Silvio Berlusconi’s centre-right alliance, which finished a close second.
The protest group Five Stars Movement led by former comedian Beppe Grillo garnered a quarter of the vote, but has refused to support either group.
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Former prime minister and centre-right leader Silvio Berlusconi says he is against the idea of a new technocratic government for Italy like that led by Mario Monti.
Instead, Silvio Berlusconi said he was ready to back a coalition with centre-left leader Pier Luigi Bersani, to end the deadlock since the February election.
However, Pier Luigi Bersani, whose bloc won a narrow lead in the polls, has ruled out a coalition with the right.
If no government is formed, new elections may be called.
The stalemate is delaying reforms which could help revive Italy’s recession-hit, debt-laden economy, which is the third-biggest in the eurozone.
Italy’s political establishment was rocked by the electoral success of a protest movement, Five Star, which won a quarter of the vote on a platform attacking the parties of both right and left.
Mario Monti’s technocratic government, formed in November 2011, remains in office until a new elected government is formed. He has said he “can’t wait” to leave office.
Speaking after talks with President Giorgio Napolitano, Silvio Berlusconi said he believed there was scope for agreement on action to address the economic crisis.
Silvio Berlusconi said he would back a coalition made up of the left, right and centre.
Any new government must be made up of political parties, “given the tragic experience” of the Monti government, the People of Freedom party leader said.
Silvio Berlusconi’s ally Roberto Maroni, leader of the right-wing Northern League, also rejected another technocratic government, saying it would be better to hold another election.
Recent opinion polls suggest Silvio Berlusconi and Roberto Maroni have, between them, a narrow lead over the centre-left.
Pier Luigi Bersani has already tried and failed to form a new government, whether as a coalition or as a minority government.
“Only a mentally ill person could have a burning desire to govern right now,” he said on Wednesday at a meeting with Five Star politicians.
Five Star, led by former comedian Beppe Grillo, has made clear it will not back any government led by either the centre-left or centre-right.
Beppe Grillo posted an entry on his blog this week in which he called mainstream politicians including Silvio Berlusconi and Pier Luigi Bersani “old whoremongers”.
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JWT India has decided to sack employees over a series of controversial Ford Figo advertisements, including one showing former Italian PM Silvio Berlusconi with a group of bound women in a car boot.
The adverts were never commercially used but appeared on a website.
JWT, a unit of the world’s biggest advertising group WPP, said the posters were “distasteful and contrary to standards” followed at the company.
The firm’s managing partner, Bobby Pawar, has been asked to leave.
JWT India has decided to sack employees over a series of controversial Ford Figo advertisements, including one showing former Italian PM Silvio Berlusconi with a group of bound women in a car boot
According to reports, the creative director of Blue Hive, a WPP unit dedicated to managing the Ford business, Vijay Simha Vellanki, has also been asked to resign.
“We deeply regret the publishing of posters,” JWT said in a statement.
“After a thorough internal review, we have taken appropriate disciplinary action with those involved, which included the exit of employees at JWT.”
One of the adverts showed Silvio Berlusconi in the driver’s seat with three bound women in the boot and a slogan: “Leave your worries behind with Figo’s extra-large boot.”
They were uploaded on a website just days after India passed strict anti-rape laws.
The posters had triggered comments against them on the various social media, with many people labelling them as sexist.
The controversy saw the Indian unit of Ford Motor Company issuing an apology earlier this week.
JWT also condemned the posters saying that “these were never intended for paid publication and should never have been created, let alone uploaded to the internet”.
“This was the result of individuals acting without proper oversight and appropriate actions have been taken within the agency where they work to deal with the situation,” it said.
According to some reports, Ford is one of JWT’s biggest global accounts.
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Ford India has apologized for an advertisement showing former Italian PM Silvio Berlusconi with a group of bound women in the boot of a car.
The advert, showing three women bound and gagged in the boot of a Ford Figo, appeared on a website.
Silvio Berlusconi was shown in the driver’s seat with a slogan: “Leave your worries behind with Figo’s extra-large boot.”
The advert has not been used commercially.
Ford India has apologized for an advertisement showing former Italian PM Silvio Berlusconi with a group of bound women in Figo’s boot
Reports say that it was posted online by the India-based advertising agency hired by Ford.
Ford Motor Company said it regretted the incident and called the images “contrary to the standards of professionalism and decency within Ford”.
“We deeply regret this incident and agree with our agency partners that it should have never happened,” Ford said.
A Ford spokesperson said the company was taking the incident “seriously and are reviewing approval and oversight processes, and taking necessary steps to ensure nothing like this ever happens”.
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Italy’s President Giorgio Napolitano has asked centre-left leader Pier Luigi Bersani has been to try to form a new government, following inconclusive elections.
Pier Luigi Bersani’s Democratic Party (PD) won control of the lower house of parliament in February’s poll, but fell short of a majority in the Senate.
He has ruled out a coalition with Silvio Berlusconi’s centre-right coalition, which finished second.
If no solution is found, Italy could face fresh elections.
President Giorgio Napolitano announced that he had asked Pier Luigi Bersani to form the new government during their meeting at the presidential palace in Rome on Friday.
Giorgio Napolitano said that Pier Luigi Bersani was best positioned to be given the task under “the most difficult circumstances”.
“He will refer back to me as soon as possible,” added the president, who earlier this week held two days of consultations with political leaders.
Italy’s President Giorgio Napolitano has asked centre-left leader Pier Luigi Bersani has been to try to form a new government, following inconclusive elections
Pier Luigi Bersani said he accepted the task and would try to “find balance” between changes sought by Italian voters and reforms needed to lead Italy out of the economic crisis.
However, it remains unclear how the centre-left would achieve a majority in the Senate.
Beppe Grillo, whose Five Star Movement won 25% of the vote, has insisted he will not support the PD or any established political party.
Pier Luigi Bersani, 69, is a former Communist who has more recently earned a reputation as an economic reformer.
But he has come under increasing pressure within his own party after failing to convert a poll lead into a clear election victory.
The political uncertainty has increased pressure on Italy’s stagnant economy, as well as feeding into concerns about the stability of the eurozone.
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An Italian court has ordered medical checks to be carried out on Silvio Berlusconi to verify that he cannot attend a trial due to health problems.
Silvio Berlusconi, 76, has been in hospital since Friday because of an eye inflammation.
The former prime minister is on trial in Milan on charges of paying for sex with an underage prostitute and abuse of power.
Meanwhile, prosecutors in Naples are requesting an accelerated trial for Silvio Berlusconi on corruption charges.
Italian law allows for the scrapping of preliminary hearings, which can last more than a year, when evidence of the alleged crime is considered overwhelming.
The judge has 10 days to decide whether to permit an “immediate trial”.
Silvio Berlusconi is accused of paying a left-wing senator 3 million euros ($3.9 million) to defect to his right-wing People of Freedom party (PDL) in 2006.
It weakened the government of Romano Prodi, which collapsed in 2008, and triggered elections that returned Silvio Berlusconi to power.
Last week, Silvio Berlusconi was convicted of breach of confidentiality and sentenced to a year in jail over the illegal publication of a wiretapped conversation by one of his newspapers. He denied the charge and is expected to appeal.
An Italian court has ordered medical checks to be carried out on Silvio Berlusconi to verify that he cannot attend a trial due to health problems
Silvio Berlusconi is currently appealing against a conviction for tax fraud over deals his firm Mediaset made to purchase TV rights to US films. A verdict is expected soon.
On Monday, Silvio Berlusconi’s lawyers told judges in Milan that he was not able to attend his trial for a second day because he had uveitis, an inflammation of the middle layer of the eye. He was also said to be suffering from high blood pressure.
However, prosecutors said Silvio Berlusconi was exaggerating the problem to delay proceedings and the judges ordered medical checks to be made.
They had been due to present their final arguments and make their sentencing requests for the alleged crimes, which date back to 2010.
A verdict in the two-year trial had been expected later this month.
If convicted of paying 17-year-old Karima “Ruby” El Mahroug for sex, Silvio Berlusconi faces up to three years in prison. He could be sentenced to a further 12 years if found guilty of abusing power by putting pressure on police to have Karima El Mahroug released from custody after she was arrested for theft. He has denied both charges.
There was further disruption to Monday’s trial when members of the PDL marched into the court building to demand it be suspended.
Laura Ravetto, a senior party official, told the AFP news agency: “I think there is a judicial plot against Berlusconi.”
The controversy comes weeks after the PDL did better than expected in a general election that provided no clear winner. However, the right-wing coalition looks to be on the margins of efforts to form a new government.
Silvio Berlusconi has been convicted and sentenced to a year in jail over an illegal wiretap.
Italy’s former prime minister was accused of arranging for a police wiretap concerning a political rival to be leaked and published in a newspaper run by his brother.
Silvio Berlusconi is likely to appeal and will remain free in the meantime.
He is presently appealing against another conviction and faces two more verdicts in the coming weeks.
One of the rulings expected later this month is about tax fraud, and the other trial concerns allegations that Silvio Berlusconi paid for sex with an underage prostitute.
There is no real prospect of Silvio Berlusconi going to jail, but the conviction is another very serious blow to his reputation.
It comes weeks after his right-wing coalition did better than expected in a general election, and is expected to form a major bloc in the next parliament.
Silvio Berlusconi has been convicted and sentenced to a year in jail over an illegal wiretap
In October last year, Silvio Berlusconi was convicted in another tax fraud case and sentenced to a year in jail.
That conviction is currently subject to an appeal.
Prosecutors brought the wiretap case after a transcript of a phone conversation intercepted by the authorities was published in the newspaper Il Giornale, owned by Silvio Berlusconi’s brother Paolo.
The conversation took place between the head of insurer Unipol and Piero Fassino, who was the leader of the biggest centre-left party and Silvio Berlusconi’s biggest political rival at the time.
Unipol was trying to take over BNL bank in 2005. Magistrates had ordered the wiretap as part of an investigation into inappropriate interference in the takeover.
The publication of the transcript in a national newspaper broke secrecy rules, and Silvio Berlusconi was accused of obtaining the transcript from the wiretap company used by magistrates.
In numerous trials over the years, Silvio Berlusconi has been accused of charges including accounting fraud, perjury, bribery, corruption, having unlawful sex with a minor, and fraud over the sale of film rights.
Silvio Berlusconi says he is the target of a vendetta by politically biased prosecutors. He has denied all the accusations against him and has either been acquitted or let off under statutes of limitations.
Silvio Berlusconi hosted prostitution parties at his Milan villa and paid women with favors and cash, Italian prosecutors at his trial have said.
Former PM Silvio Berlusconi, on trial for paying an underage prostitute, Karima El Mahroug, said he never had to pay for “intimate relations”.
Both Silvio Berlusconi and Karima El Mahroug – better known by her stage name “Ruby Heartstealer” – have denied ever having an intimate relationship.
A verdict in the trial is expected later this month.
Prosecutor Antonio Sangermano said the parties organized at the villa in Arcore, north-east of Milan, were the “expression of a tried and tested prostitution system organized to satisfy the sexual pleasure of Silvio Berlusconi, and of which the young Moroccan girl was completely a part”.
In his closing arguments, Antonio Sangermano said that the parties involved dinner, erotic dancing and then sex between aspiring television starlets and the invited guests.
Silvio Berlusconi said he was “a bit surprised and amused” at the “imaginative” description of his “infamous dinners”.
“I have had the twin fortune – perhaps deserved – of never having to pay a woman or girl for intimate relations and always being able to give assistance to whoever asked me for help,” he said in a statement.
“Probably the prosecutor has had neither of these two ‘fortunes’ and he makes these assertions as if I were him.”
Silvio Berlusconi hosted prostitution parties at his Milan villa and paid women with favors and cash, Italian prosecutors at his trial have said
The case is one of several that have dogged the former prime minister. In the most recent, Silvio Berlusconi was convicted of tax fraud in connection with the purchase of broadcasting rights by his Mediaset TV company.
Silvio Berlusconi was sentenced to a year in prison and barred from holding office for five years – though this will not be enforced until his appeal is complete.
On Friday, the prosecution is scheduled to set out the sentence it says Silvio Berlusconi should face if found guilty in the sex trial.
Silvio Berlusconi, 76, faces up to 15 years in prison if convicted, though nothing will be finalized until he has been allowed to appeal twice – normally a lengthy process in the Italian legal system.
The continued scandal around Silvio Berlusconi has made other parties increasingly reluctant to work with him in parliament after last week’s inconclusive election, where his centre-right group achieved second place.
Centre-left leader Pier Luigi Bersani on Monday issued an ultimatum to anti-establishment comic Beppe Grillo, who gained one in four votes, to support a new government or return to the polls.
Italian comedian-turned-politician Beppe Grillo, whose Five-Star Movement (M5S) defied expectations to come third in last weekend’s elections, has ruled out a coalition with Pier Luigi Bersani’s centre-left bloc.
Pier Luigi Bersani’s Democratic Party (PD) won a majority in the Chamber of Deputies but fell short in the Senate.
Beppe Grillo said he expected Pier Luigi Bersani to agree a deal with Silvio Berlusconi’s People of Freedom (PdL).
The inconclusive polls have pushed up borrowing costs for the government.
On Wednesday, the Italian treasury sold 4 billion euros of new 10-year government bonds on the financial markets at a yield of 4.83%, up from 4.17% at its last sale in January, and 2.5 billion euros of new five-year bonds at a yield of 3.59%, up from 2.94%.
The latest rates are seen as bearable, but that the rises signal that investors want to see a strong Italian government, committed to economic reforms.
It is certainly possible that borrowing costs will rise further if the political uncertainty drags on for a long period.
Beppe Grillo said he would not support any new government and he expected fresh elections to be held within a year.
“Today in Italy, what will happen is what happened before. The right and the left will get together and will govern a country of rubble that they are responsible for,” he said.
“It will last a year. One. Maximum. Then there will be elections again. And once again, in the elections, the Five-Star movement will change the world,” he added.
Beppe Grillo, whose M5S defied expectations to come third in last weekend’s elections, has ruled out a coalition with Pier Luigi Bersani’s centre-left bloc
Beppe Grillo, 64, said the M5S would decide whether to support specific legislation on a case-by-case basis.
Any attempts to persuade the movement to take part in a government were fake, he asserted.
Beppe Grillo also rejected the suggestion that he was inciting popular anger, saying he should be thanked for giving angry people hope.
“There was no hope. It was an anger without hope. It is anger without hope that creates violence,” he explained.
“But anger with hope is a different kind of anger, an optimistic anger, it is not negative. We are containing this rage, so they should thank me. It is a democratic rage that is needed to go forward.”
On his blog, Beppe Grillo also published a mocked-up film poster depicting Pier Luigi Bersani as a Dead Man Talking, based on the 1950 Italian comedy, 47 Morto Che Parla.
“Bersani is a political stalker,” Beppe Grillo wrote.
“It’s been days that he has been bothering the M5S with indecent proposals rather than resigning [the leadership of the PD], as anyone else would have done in his place.”
The Democratic Party and its centre-left allies won a narrow victory in the Chamber of Deputies, but the Senate appears split with no party in control.
Silvio Berlusconi’s centre-right coalition is the second biggest bloc in the upper house. The seats under Beppe Grillo’s control in both houses could therefore prove crucial in making any coalition government viable.
On Tuesday, Pier Luigi Bersani outlined a series of policies for a PD-led government which appeared to mostly be in line with M5S’s manifesto.
He said any groups backing the government would have to vote for it in the confidence motion required when a new administration takes office, and urged Beppe Grillo to “assume his responsibilities”.
Meanwhile, a German opposition leader has made waves by describing Beppe Grillo and Silvio Berlusconi as “clowns”.
The Social Democratic Party’s candidate for chancellor, Peer Steinbrueck, told a rally in Potsdam that he was “shocked to a certain degree that two clowns have won” the Italian elections and made it clear he was referring to the two party leaders, calling the former prime minister “definitely a clown with a special testosterone boost”. Silvio Berlusconi has been embroiled in a series of sex scandals.
Italian President Giorgio Napolitano cancelled a dinner with Peer Steinbrueck after learning of his remarks, a spokesman for the SPD candidate said.
Giorgio Napolitano is still due to meet Chancellor Angela Merkel in Berlin on Thursday.
Both Beppe Grillo and Silvio Berlusconi campaigned against the austerity measures imposed by Italy’s technocratic Prime Minister, Mario Monti, which were supported by Angela Merkel.
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European markets and politicians have reacted anxiously after Italy’s general election produced a stalemate between centre-right and centre-left blocs.
France and Germany urged continued reform, while Spain described the result as a “jump to nowhere”.
Italian markets fell sharply while others in Europe and around the world opened down.
Centre-right leader Silvio Berlusconi said fresh elections should be avoided, and called for a period of reflection.
With all domestic votes counted, Pier Luigi Bersani’s centre-left bloc won the lower house vote but has failed to secure a majority in the Senate. Control of both houses is needed to govern.
A protest movement led by comedian Beppe Grillo won 25%, but the centrist bloc led by current PM Mario Monti came a poor fourth, with about 10%.
The outcome of the election, which comes amid a deep recession and tough austerity measures, was so close between the two main blocs that the margin of victory given in interior ministry figures was less than 1% in both houses of parliament.
The winning bloc automatically gets a majority in the lower house. But the same is not true in the Senate, where seat allocations are decided by region and can conflict with the national vote.
European politicians reacted with a mixture of calm and concern.
European Commission spokesman Olivier Bailly said the EU expected Italy to “honor its commitments” on debt and deficit reduction, and other structural reform.
“We clearly hear the message of concern expressed by Italian citizens,” he said at a news conference.
“The Commission has full confidence in Italian democracy and… will work closely with the future government towards the re-launch of growth and job creation in Italy.”
French Finance Minister Pierre Moscovici said the result “creates problems” but would not undermine the European single currency.
German Foreign Minister Guido Westerwelle, meanwhile, urged Italy to continue its reforms, and called for a government to be formed “as quickly as possible”.
But his Spanish counterpart there was “extreme concern” about the financial consequences.
“This is a jump to nowhere with positive consequences for nobody,” Jose Manuel Garcia-Margallo said, according to Associated Press news agency.
European markets and politicians have reacted anxiously after Italy’s general election produced a stalemate between centre-right and centre-left blocs
Shares and the euro fell as the outcome of the election became clear, amid concern that the reform agenda would be delayed.
Italy’s FTSE MIB index initially fell 4.7%, while London’s FTSE 100 shed 1.5% and share markets in Frankfurt and Paris also fell more than 2%.
In New York, the Dow Jones Industrial Average fell 1.55% and Asian markets lost between 0.7% and 2.2%.
The yield on Italian government bonds rose sharply, implying markets are more wary of lending to Italy.
As Silvio Berlusconi conceded to his opponents in the lower house, he said that everyone should now reflect on what to do next so that fresh elections could be avoided.
“Italy must be governed,” Silvio Berlusconi said.
“Everyone must be prepared to make sacrifices.”
He would not do a deal with Mario Monti’s centrist bloc, saying that the prime minister’s poor showing was down to popular discontent with his austerity measures.
Silvio Berlusconi, 76, left office in November 2011, facing claims of economic mismanagement as the eurozone struggled to contain Italy’s debt crisis.
Italians have had more than a year of technocratic government under Mario Monti. But his attempts to reduce spending caused widespread public resentment and his decision to head a centrist list in the parliamentary elections attracted little more than 10% of the vote.
In a surge in support, Beppe Grillo’s anti-austerity Five Star Movement attracted more than a quarter of the vote, making it the most popular single party in the lower chamber.
Correspondents say this was an extraordinary success for the Genoese comic, whose tours around the country throughout the election campaign – hurling insults against a discredited political class – resulted in his party performing well in both chambers.
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European markets have opened lower, with the inconclusive election result in Italy raising fears that political deadlock will delay economic reforms.
Italy’s FTSE MIB index fell 4.7%, while London’s FTSE 100 shed 1.5% and share markets in Frankfurt and Paris also fell more than 2% at the start.
The yield on Italian government bonds also rose sharply, implying markets are more wary of lending to Italy.
Earlier, stock markets in Asia had closed lower.
Japan’s main Nikkei 225 stock index lost 2.2%, Hong Kong’s Hang Seng fell 0.8% and Australia’s ASX was down 1%.
Oil prices also dropped, hit by worries that uncertainty in the eurozone could hit demand, with Brent crude falling 87 cents to $113.57 a barrel.
With all domestic votes counted in Italy’s parliamentary election, the centre-left bloc won the lower house by a tiny margin, but did not secure a majority in the Senate.
Fears are that a split parliament will make it harder for one group to push through their plans to revive the economy, and that may stall Italy’s process of cutting its public debt levels.
Banks were the biggest fallers on the stock markets, with shares in major banks across Europe down more than 4%.
The yield on Italian 10-year government bonds rose to 4.77% from 4.48%, and the gap between the yield on Italian and German 10-year bonds widened.
European markets have opened lower, with the inconclusive election result in Italy raising fears that political deadlock will delay economic reforms
Former Prime Minister Silvio Berlusconi, who has conceded the lower house to Pier Luigi Bersani’s centre-left bloc, played down the significance of the spread, and said he was not worried about market reaction to the vote.
But Spanish Foreign Minister Jose Manuel Garcia-Margallo said there was “extreme concern” over possible movements in bond spreads as a reaction to the results.
“This is a jump to nowhere that does not bode well either for Italy or for Europe,” he said.
Giuseppe Fontana, professor of monetary economics at Leeds University Business School, said Italian voters had sent a “chilling message” to the markets and policy makers.
Georg Grodzki, head of credit research at Legal & General Investment Management, said the Italian result would leave markets guessing for a while.
“Uncertainty is not good for confidence. It’s not bad enough for an immediate abrupt sell-off but it could well build over the next few months into some crisis,” he said.
With political instability likely to continue at least in the near term, Angus Campbell from Capital Spreads said: “The uncertainty that this causes is enough to make anyone nervous and we are likely to see an interim administration for a number of months before fresh elections, unless a working coalition can be formed.”
For more than a year Italy was led by technocrat Mario Monti, appointed after Silvio Berlusconi’s resignation in November 2011 amid an acute debt crisis.
He was tasked with reforming the economy, and introduced unpopular economic austerity measures, implementing spending cuts and tax rises.
Mario Monti resigned in December after Mr Berlusconi’s conservative party withdrew its support from his government. Although he ran in the latest election, his bloc won only 10% of the vote, with the majority of voters rejecting austerity.
Ishaq Siddiqi, market strategist at ETX Capital, warned of future turmoil in Italy.
“What is more worrying for investors is that the political deadlock in Italy would suggest that even if we do see a market-friendly scenario materialize with a reform-minded government taking control, the fact that Berlusconi managed to gain such an influence with his anti-austerity campaign means that we are likely to see a rise in civil unrest in Italy.”
Investors are now looking towards a testimony later on Tuesday from US Federal Reserve chairman Ben Bernanke.
Global markets were shaken last week by an indication from the Fed that it might scale back its strong monetary stimulus sooner than expected.
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