Italian vote gives end-of-week boost to markets
ITALY'S Senate has approved a new budget law, clearing the way for final approval of the package in the lower house on Saturday and the formation of an emergency government to replace Prime Minister Silvio Berlusconi.
The austerity and reform measures, aimed at boosting the economy and controlling a huge public debt, followed demands by European partners for urgent action to restore market confidence in Italy's strained public finances.
The prospect of a transitional government headed by respected non-partisan economist Mario Monti calmed markets for a second day, with Italy's 10-year borrowing rate down a further 0.21 percentage point to 6.59pc. Shares were buoyant too, with the FTSE MIB up 1.7pc in early trading at 15,477.
Markets have been roiled all week over Italy's political uncertainty and fears that the country was heading for a Greek-style economic crisis that would threaten the existence of the entire eurozone.
They calmed on Thursday after a groundswell of politicians rallied around Monti to lead a post-Berlusconi government, though there were still holdouts and divisions within the Berlusconi government over whether to support him.
However, European Council President Herman Van Rompuy said on Friday that Italy needed to implement urgent economic reforms, not go to the polls.