Italy

Bob Jolly, head of global macro at Schroders, has said Germany "loves" being part of the euro and suggested neither Greece nor Italy would exit the single currency for fear of the consequences.

Italy sold €3bn of five-year bonds, the maximum target, at the highest yield in more than 14 years as Mario Monti seeks to form a new government.

European markets were slightly positive in early trading as new Prime Minister Mario Monti prepares to form a new government to lead the stricken country out of its debt crisis.

Despite the Greeks managing to avoid ‘blowing up' their parliament for the time being, one wonders who will be next in the firing line. Enter Italy, stage left.

The European Union has slashed its 2012 growth forecast for the eurozone by 1.3% as the European Commissioner warns the risk of a new recession has increased.

Fears of France and Spain being the next to suffer in the eurozone debt crisis intensified as 10-year bond spreads reached euro-era highs above German yields yesterday.

So, Silvio Berlusconi has finally confirmed he is leaving. The announcement caught the headlines of the newspapers across the world. And you could almost hear the cheer across Europe.

The S&P 500 has shed more than 2% at the open alongside other US markets as investors panic over the turmoil in Italy and the growing threat of contagion spreading across Europe.

Fidelity's asset allocation director Trevor Greetham has bought Italian government debt at the margin in his multi-asset portfolios in expectation of ECB intervention, after yields spiked to record highs.

Silvio Berlusconi's pledge to resign has failed to calm investor nervousness on Italian sovereign debt, with yields on 10-year bonds rising above the crucial 7% mark this morning.