Italian Prime Minister Silvio Berlusconi defied huge pressure to resign on Monday, desperately playing his last cards to see off a party revolt as fears over Italy’s instability hit markets across Europe.
Berlusconi denied reports by journalists close to him that he would resign within hours, immediately reversing a brief recovery in stock and government bond markets battered by political uncertainty in the euro zone’s third economy.
Yields on Italy’s 10-year bonds hit their highest level since 1997 at 6.67%, close to the 7% level seen as unsustainable for Italy’s huge debt, one of the world’s highest. European stocks were also hit by the turmoil.
Political sources said a late Sunday meeting of leaders of Berlusconi’s PDL party had urged him to resign but he was still not convinced.
Government minister Gianfranco Rotondi said on Monday he was optimistic their parliamentary majority would hold. Otherwise Italy would have to go to the polls, he said after meeting Berlusconi.
The prospect of early polls, opposed by many PDL deputies including rebels, is one of the last cards left to Berlusconi. He also said those who brought down the government at a time of national peril would be traitors who would make economic reforms more difficult.
The 75-year-old media magnate and his closest aides spent the weekend trying to win back the support of enough deputies to avoid humiliating defeat on Tuesday in a crunch vote.