Demonstrators from the 15M movement rally during a protest in central Madrid August 3, 2011. Hundreds of "Indignants" held a demonstration on the streets of Madrid against politicians, banks, the economic crisis and the austerity measures of Europe. [Photo/Agencies]

ITALY

In Italy, the euro zone's third biggest economy, Prime Minister Silvio Berlusconi promised on Wednesday to step up economic reforms and called for a broad-based effort in the country to fight the market turmoil.

"The government and parliament will act, I hope, with a large political and social consensus to fight every threat to our financial stability. Today more than ever, we need to act all together," said Berlusconi, in a speech which did not give substantial new details on policy.

Berlusconi is due to meet employers' groups and unions on Thursday to try to thrash out a plan to stimulate the economy. But the head of the largest union, the left-wing CGIL, responded coolly to his speech.

Susanna Camusso said it was "disappointing" and lacked concrete proposals, and that negotiations were already "getting off on the wrong foot". The leader of the opposition Democratic party, Pierluigi Bersani, said Berlusconi should resign.

Chiara Corsa, analyst at Italian bank Unicredit, said of the speech: "I didn't have very high expectations but even so the content was quite disappointing. He showed no willingness to bring forward any of the austerity measures to next year, which we had hoped for and markets would have appreciated."

Italian Economy Minister Giulio Tremonti held two hours of emergency talks with the chairman of euro zone finance ministers, Jean-Claude Juncker, in Luxembourg on Wednesday but neither disclosed anything of substance after the meeting. Tremonti also talked with European Monetary Affairs Commissioner Olli Rehn.

 

France

In addition to Italy and Spain, some investors are becoming jittery about the finances of France, the euro zone's second biggest economy. The spread of 10-year French government bonds  above German Bunds hit a euro lifetime high of 0.81 percentage point on Wednesday.

This is problematic partly because any lasting solution to the euro zone's crisis may have to involve a drastic expansion of its 440 billion euro bailout fund. That would put a greater financial burden on France, a big contributor to the fund, and could push up its yields further.

With euro zone governments struggling to contain the crisis, some analysts believe other major governments around the world, in the Group of Seven or Group of 20 nations, may eventually intervene to try to calm the markets.

Official sources in several G7 countries say they are not aware of any move so far to involve the G7 or G20, but that France, which holds the chair of both groups this year, might consult those forums if the turmoil persists.

Canadian Finance Minister Jim Flaherty said on Wednesday he had been holding discussions with his G20 colleagues about the global economic situation.

"I've had discussions of course with what's been going on of late. We continue to monitor the situation and I'll leave it at that," he told Reuters in Toronto.