Monti calls for united response to eurozone crisis

Mario Monti
Image caption Mr Monti said Italy had "dug in its heels" to avoid a debt crisis

Italian Prime Minister Mario Monti has called for a "united response" to the eurozone debt crisis, as he announced plans to get Italy out of recession.

He added that despite the two recent successful Italian bond auctions, he did not think that the phase of financial turbulence had finished.

On Thursday the government raised about 7bn euros ($8.96bn; £5.86bn) of debt.

Interest rates on Italian 10-year bonds remained high at 6.98%, a barely sustainable level.

Mr Monti, speaking at the prime minister's traditional end-of-year press conference, stressed that problems for Italy on the markets were linked to wider difficulties on the European level which required a "united, joint and convincing response" that could also boost growth.

He said his new government was working intensively on preparing a package of measures to get the Italian economy moving again. He will present details of his economic plan to EU leaders on 23 January.

The plan would focus on boosting competition and liberalising the Italian jobs market, Mr Monti said.

'Vultures circling'

He said Italy had been sliding towards a debt crisis like the one seen in Greece, but had "dug in its heels" at the precipice and did not fall.

"We're not very close to Greece's situation," he said. "We were heading south-east [toward Greece] and we put on the brakes."

He added that until the government took action, "there were many vultures circling in the skies of the European and international markets".

Italy is the eurozone's third largest economy, but investors worry about its mix of low growth, high debt and spiralling borrowing costs.

It is feared the country might need a bailout like fellow eurozone members Greece, Ireland and Portugal.

Although yields on Italian bonds fell from recent record highs at Thursday's debt auction, the country's cost of borrowing remains relatively expensive.

"The bond auction went okay, given what is going on in the eurozone, but almost 7% for 10-year paper is very high," said Manoj Ladwa, a trader with ETX Capital.

When Mr Monti replaced Silvio Berlusconi as prime minister last month, short-term fears of an economic collapse receded, but investors are now waiting for the details of Mr Monti's proposals to try to improve the Italian economy.