Italy's Monti wins support for new government

Prime Minister-designate Mario Monti of Italy said Tuesday he is ready to present his new government to the president after winning wide backingand important pledges of sacrifices from political, business and union leaders during two days of intense consultations.

Monti said he still has to put the final touches on his cabinet and economic program, which he will outline to President Giorgio Napolitano on Wednesday. His government must receive votes of confidence in both houses of Parliament, expected this week, to take office and begin the task of steering the eurozone's third-largest economy through its debt crisis.

Monti expressed his "serenity" and "conviction" in Italy's ability to overcome the difficult phase in its history.

"I was impressed by the sense of responsibility and willingness to back social growth," Monti said. "Everyone offered concrete contributions of possible partial sacrifices in exchange for a more general positive outcome."

Monti, a respected economist and former European commissioner, is under pressure to quickly reassure markets that Italy will avoid a default that could tear apart the 17 countries that use the euro currency and push the global economy back into recession.

Monti, 68, has already shown his determination to press through deep reforms by making it clear he intends to serve until regularly scheduled elections in 2013, rejecting calls for an early vote.

On Tuesday, after rounds of meetings, Monti garnered support from the centre-left Democratic Party, Silvio Berlusconi's People of Freedom party and the Confindustria, a powerful business lobby.

"We strongly support the birth of this government because for us it is the last chance to regain credibility," Confindustria leader Emma Marcegaglia said.

Union leader Raffaele Bonanni said Monti was close to completing his Cabinet at the time of their meeting Tuesday afternoon.

"Monti told us that he has reached an agreement with the main political forces that will give him a consistent parliamentary majority that will support him and he will very quickly be in a position to present the list of ministers," said Bonanni, leader of the powerful CISL union.

Stocks sag

Despite reports of progress, European markets closed lower Tuesday as investors worried that politicians might pull their support in the future if austerity measures proved unpalatable.

Amid the uncertainty, the yield on Italy's 10-year bonds jumped again to 6.94 percent. Last week's spike above 7 percenta level considered unsustainable in the long termraised fears Italy would eventually need a bailout like Greece, Ireland and Portugal.

But a financial debacle in Italy raises a whole new set of problems, for the country is considered too big for Europe to bail out.

Monti was asked to form a government Sunday, after Berlusconi resigned amid weeks of market turmoil over Italy's stagnant growth and high public debt, which at1.9 trillion ($2.6 trillion) is nearly 120 per cent of GDP.

Many of those debts are coming due soon, with Italy having to roll over more than300 billion ($410 billion) of its debts next year alone.

Monti met Tuesday with the head of the Democratic Party and Angelino Alfano, leader of the Peoples of Freedom party.

"We think, in light of the facts and after this latest conversation, that Professor Monti's attempts are destined to turn out well," Alfano told reporters afterward.

Previously, his party had conditioned its support on the shape of Monti's cabinet, his government agenda and the duration of his term.

Pierluigi Bersani, head of the Democratic Party, pledged support and placed no timeframe on Monti's tenure.

Call for early vote

Only the Northern League, Berlusconi's allies, have refused to support his government. They wanted early elections this spring, something Monti has rejected.

The EU, meanwhile, says said new measures will be necessary for Italy to balance its budget as promised by 2013. The eurozone avoided contracting in the third quarter, thanks mainly to Germany and France, but is widely expected to fall into recession imminently as a result of its raging debt crisis.

Monti says Italians will have to make some sacrifices to get through the crisis but "not tears and blood."