Italy

The FTSE 100 dropped sharply mid-morning as investors fretted over the future of Italy following a spike in the country's bond yields to record levels.

Global markets received a much needed shot in the arm overnight as Italian prime minister Silvio Berlusconi's resignation offer reassured investors an end to the country's problems may be in sight.

Italian prime minister Silvio Berlusconi faces renewed calls to resign after he failed to secure a parliamentary majority in a budget vote among MPs.

Markets moved lower on Monday as fears over Greece and Italy remained despite the imminent formation of a Greek coalition government.

Yields on 10-year Italian government bonds sold at auction have spiked to their highest level since the creation of the euro, as investors continue to fret over the health of the country despite yesterday's rescue deal.

EAST OR WEST...

Italian and Spanish government debt have both been downgraded by the Fitch credit rating agency.

Ratings agency Moody's has slashed Italy's credit rating, piling more pressure on the beleaguered eurozone.

Italy has had its sovereign debt rating cut by ratings agency Standard & Poor's as the European debt crisis continues to rumble on.

Ratings agency Moody's has extended its review of Italy's Aa2 credit rating by a further 30 days as it assesses the country's financial position.