Italy awaits market reaction to Monti exit soon

Topics: From the Wires,

ROME (AP) — Italy and the rest of Europe anxiously awaited the reaction of financial markets to Premier Mario Monti’s surprise decision to resign and set the stage for an early vote, as speculation abounded whether he might dive into politics and challenge Silvio Berlusconi in the election.

Monti has been widely credited with restoring faith in the country’s capacity to survive the eurozone debt crisis since he took over the helm of a non-elected “technocrat” government. But he said Saturday it was impossible to continue to lead after Berlusconi’s party, Parliament’s largest, dropped its support and blamed his austerity measure for Italy’s staying mired in recession.

“We’ll see what the markets will do,” President Giorgio Napolitano told reporters asking if he was worried about the repercussions of the political crisis, including how it would affect its credibility and financial ratings.

It was Napolitano who appointed Monti, an internationally respected economist, last year to replace Berlusconi, the three-time premier whose resistance to potentially unpopular austerity measures panicked financial markets and helped set Italy tottering toward a Greece-style debt crisis.

Monti told Napolitano he would step down as soon as Parliament passes a budget bill, likely within two weeks, setting the stage for elections as soon as February.

Monti’s accomplishments at the helm of the nonpartisan government included steering through Parliament tough pension reform, higher sales taxes and a revived property tax. He nonetheless enjoys high popularity ratings. He has been widely praised by economic analysts, central bankers and many European leaders.

“Mario Monti’s government has achieved great things in a short period of time — won back the confidence of investors, moved forward budget consolidation,” Joerg Asmussen, a German member of the European Central Bank’s executive board, was quoted as telling Germany’s Bild daily.

A London-based analyst at UniCredit, Erik F. Nielsen, said in his weekly comments Sunday that he wasn’t worried that Berlusconi was running again, but warned that “you should expect some short-term market reactions.”



Nielsen, the Italian bank’s global chief economist, said there would probably be a sell-off in Italian assets Monday morning, followed by some pressure into Thursday’s bond auction. But “I am not seriously worried about the direction of policies in Italy — and if Monti were to take a clear stand in the election, I suspect that the rally could be back on before long.”

Supporters have encouraged Monti to run for the premiership, and speculation about whether he would take on Berlusconi has been rife in the media. He stayed silent when Corriere della Sera newspaper asked him if he would run, the Milan daily said Sunday.

______

AP reporter Geir Moulson contributed from Berlin.

Featured Slide Shows

  • Share on Twitter
  • Share on Facebook
  • 1 of 7
  • Close
  • Fullscreen
  • Thumbnails
    Dinah Fried

    Famous literary meals

    "Fear and Loathing in Las Vegas" by Hunter S. Thompson

    Dinah Fried

    Famous literary meals

    "Alice's Adventures in Wonderland" by Lewis Carroll

    Dinah Fried

    Famous literary meals

    "Moby Dick" by Herman Melville

    Dinah Fried

    Famous literary meals

    "The Bell Jar" by Sylvia Plath

    Dinah Fried

    Famous literary meals

    "The Catcher in the Rye" by J.D. Salinger

    Famous literary meals

    "The Metamorphosis" by Franz Kafka

  • Recent Slide Shows

Comments

0 Comments

Comment Preview

Your name will appear as username ( settings | log out )

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>