Investors spooked as Italy looks down tough road to unity gov't
Reuters, AP and AFPLONDON/ROME -- The Italian stock market fell and state borrowing costs rose on Tuesday as investors took fright at political deadlock after a stunning election that saw a comedian's protest party lead the poll and no group secure a clear majority in parliament.
February 27, 2013, 12:08 am TWN
“The winner is: Ingovernability” ran the headline in Rome newspaper Il Messaggero, reflecting the stalemate the country would have to confront in the next few weeks as sworn enemies would be forced to work together to form a government.
In a sign of where that might lead, former prime minister Silvio Berlusconi indicated his center-right might be open to a grand coalition with the center-left bloc of Pier Luigi Bersani, which will have a majority in the lower house thanks to a premium of seats given to the largest bloc in the chamber.
Results in the upper house, the Senate, where seats are awarded on a region-by-region basis, indicated the center-left would end up with about 119 seats, compared with 117 for the center-right. But 158 are needed for a majority to govern.
Any coalition administration that may be formed must have a working majority in both houses in order to pass legislation.
Comedian Beppe Grillo's anti-establishment 5-Star Movement won the most votes of any single party, taking 25 percent. He shows no immediate inclination to cooperate with other groups.
Despite talk of a new election, the main established parties seem likely to try to avoid that, fearing even more humiliation.
World financial markets reacted nervously to the prospect of a stalemate in the eurozone's third largest economy with memories still fresh of the crisis that took the 17-member currency bloc to the brink of collapse in 2011.
In a clear sign of worry at the top over what effect the elections could have on the economy, Prime Minister Mario Monti, whose austerity policies were repudiated by voters, called a meeting with the governor of the central bank, the economy minister and the European affairs minister for later on Tuesday.
Other governments in the eurozone sounded uneasy. Allies of German Chancellor Angela Merkel made no secret of disappointment at Monti's debacle and urged Rome to continue with economic reforms Berlin sees as vital to stabilizing the common currency.