Berlusconi revives old party, could undermine government

|By:, SA News Editor

Italian markets are expected to be in focus this week after Silvio Berlusconi again undermined the stability of the ruling coalition, of which his center-right grouping is a member, by reviving his old Forza Italia party and suspending his existing grouping, the People of Freedom (PDL).

The move could split the right: Berlusconi and his supporters - who tried to bring down the government following the former prime minister's conviction for tax fraud - would be in Forza Italia, while the more "dovish" members of the right-of-center group - who blocked Berlusconi's efforts - would remain in the PDL.

The doves probably have enough members to stop the government from falling if the former Prime Minister were to withdraw his support, but it could be more difficult to force through economic reform.

ETFs - Stocks: EWI. Bonds: ITLT, ITLY