(Reuters) – Bond markets may be succeeding where political opponents have failed, pushing Prime Minister Silvio Berlusconi closer to the exit and opening up fresh uncertainties as Italystruggles to avoid financial disaster.
The spread between yields on 10-year Italian bonds over German Bunds briefly climbed past the equivalent Spanish/German spread on Friday morning, underlining the perception that Italy now poses the major threat to euro zone stability.
Berlusconi’s response to the crisis, blaming international conditions and pledging unspecified measures to boost growth, has fallen flat with markets suddenly focusing on his divided government and longstanding weaknesses in the Italian economy.
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