Stock markets surged on Tuesday in the run-up to an Italian parliamentary vote that could determine whether Silvio Berlusconi remains the countrys premier and if Rome is able to rein in its debts or not.Associated Press reported that markets remain jittery and could easily swing back and forth, depending on how Berlusconis government fares in the budget vote.Berlusconis government is under intense pressure to enact quick reforms to shore up Italys defences against Europes raging debt crisis. However, a weak coalition and doubts over Berlusconis ability to push through austerity measures have heightened speculation that Italy could need financial aid.In a reflection of the uncertainty surrounding Italys future, the interest rates it pays to borrow money for 10 years spiked at one point on Tuesday to 6.74 per cent, its highest level since the creation of the euro in 1999.Those rates are an indicator of investors confidence in Romes ability to pay down its debts, but they also affect that ability: If they rise too high, the country might not be able to make interest payments or roll over its debts.Thats an outcome everyone wants to avoid, since Italy, with $2.6tn in debt and the eurozones third-largest economy, is generally considered too big to bail out.By Tuesday afternoon, the yield or interest rate, on Italys 10-year bonds was at 6.57 per cent.A rate of over seven per cent is considered unsustainable and proved to be the trigger point that forced Greece, Ireland and Portugal into accepting the need for financial bailouts.Uncertainty also surrounds Greece, which last week flirted with asking voters to approve a rescue package but is now heading for a new national unity government instead. Athens creditors are demanding that the leaders of the two main parties commit in writing to upholding their end of the deal -- or risk jeopardizing the billions of euros in loans that are keeping the country afloat.For the time being, however, investors seemed to be hoping that Italy would commit to budget cuts that would push down its borrowing costs.Markets were buoyed Monday by rumours that Prime Minister, Mr. Silvio Berlusconi, whose credibility on delivering reforms is wafer-thin, would lose a parliamentary vote scheduled for later Tuesday. The hope in the markets is that a new Italian government would be more serious about getting the public finances into shape and delivering on the reform programme."Markets might be higher, but the stresses are still showing in the currency and bond markets, with the euro struggling to make headway and Italian benchmark yields still in dangerous territory," an analyst with IG Index, Chris Beauchamp, said."We had one Berlusconi bounce yesterday on rumours of his departure; so an actual change of government could prompt another surge on markets," Beauchamp added.In Europe, Frances CAC-40 rose by 2.3 per cent to 3,176, while Germanys DAX climbed by 2.1 per cent to 6,051. The FTSE index of leading British shares rose by 1.6 per cent to 5,596.07.Wall Street also opened higher. Dow futures were up by 0.4 per cent at 12,117, while the broader Standard & Poors futures rose by 0.6 per cent to 1,269. The euro was also up modestly, gaining 0.5 per cent to $1.3828.Concerns about the eurozone debt crisis have weighed on the global economy and any sign that Europe is moving towards resolution has generally been taken as a good sign for growth and thus demand for energy.Benchmark crude for December delivery rose by $1.02 to $96.54 in electronic trading on the New York Mercantile Exchange.Earlier, though, Asian markets were beset by uncertainty. Japans Nikkei 225 index fell by 1.3 per cent to close at 8,655.51. South Koreas Kospi swung into negative territory midday, to close 0.8 per cent down at 1,903.14.
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