Italy crisis: Debt cost puts pressure on Mario Monti
Italy＇s cost of borrowing has risen again to the 7% danger level, putting the new PM Mario Monti under pressure as he tries to form a government.
The Italian bond yield reached 7.039%, indicating continuing market nervousness about the country＇s debts.
Mr Monti met the leader of the centre-left Democratic Party (PD), Pier Luigi Bersani, on Tuesday.
Talks are also scheduled with the centre-right People of Freedom Party (PDL) of outgoing PM Silvio Berlusconi.
Mr Monti, an unelected technocrat and former EU commissioner, has said he will "act with urgency" to address Italy＇s deep-rooted economic problems.
The Italian bond rate reached a record of 7.48% last Wednesday, draining investor confidence and hastening the departure of Silvio Berlusconi. Lenders worry that the government may not repay its debts.
Centre-left support
Speaking after the meeting on Tuesday, Mr Bersani said "we encouraged Professor Monti to go ahead with determination".
"We did not set a deadline to the government," he added.
All parties agree on a predominantly technocratic rather than political government but the PDL remains divided towards Mr Monti, who has said he intends to remain in office until the end of the current legislature - 2013.
He was appointed on Sunday after emergency austerity measures were passed by parliament, triggering the resignation of Mr Berlusconi.
Mr Monti described initial talks with smaller parties on Monday as "constructive".
"The political powers are conscious that we must have a period of calm to allow us to move forward with a sense of responsibility and cohesion," the new prime minister said, according to La Repubblica newspaper.
＇Tempering impatience＇
While acknowledging the urgency of the task he now faces, Mr Monti said he would need to take time to line up a strong team, expected to be made up of non-political technical experts.
He added that he hoped the markets would understand this and "temper their impatience".
In what was seen as the first test of Mr Monti＇s leadership, Italy sold 3bn euros ($4.2bn, £2.6bn) of new five-year bonds on Monday.
However, it had to pay more to borrow the money, a rate of 6.29%, indicating continuing unease in the markets.
Late last week, the level had soared to above 7%, the rate at which Greece, Ireland and Portugal were obliged to seek emergency bailouts from the EU.
Over the weekend, parliament passed a package of austerity measures demanded by the EU with the aim of balancing the budget by 2014. The measures foresee 59.8bn euros in savings, from a mixture of spending cuts and tax rises.
Deeply divided
The 68-year-old Mr Monti needs a newly appointed government to pass a confidence vote in parliament, expected as soon as this week.
Fabrizio Cicchitto, a senior PDL politician, said his party would take a "constructive approach as long as there is debate on the policy proposals and on the government＇s structure".
"We won＇t agree to anything in the dark," he added.
The leader of the right-wing Northern League party - whose withdrawal of support from Mr Berlusconi＇s coalition helped precipitate his downfall - has said he will not attend any meetings with Mr Monti, La Repubblica reports.
Umberto Bossi has said he will not support any newly named government in a confidence vote and will only back measures passed on a "case-by-case" basis, the newspaper says.
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