ROME - Italy's president held urgent talks aimed at naming a prime minister on Tuesday after two months of post-election stalemate, with the young centre-left mayor of Florence Matteo Renzi emerging as a late candidate for the job.
Former Prime Minister Giuliano Amato is widely considered to be the favoured choice of President Giorgio Napolitano, who has the final say and is expected to make the appointment late on Tuesday or Wednesday.
Hopes that a government can be formed quickly gave a further boost to financial markets on Tuesday, with the yield on 10-year Italian government bonds dropping below 4 percent and the spread, or risk premium over German bonds, narrowing further.
Silvio Berlusconi's centre-right said it had no objections to Renzi after his name was suggested by the centre-left Democratic Party (PD) late on Tuesday.
Renzi, 38, who opinion polls indicate as the country's most popular politician, was not even considered in the frame of possible candidates until late on Monday when he was proposed by PD executive member Matteo Orfini.
“The People of Freedom (PDL) is not in principle against the candidacy of Renzi,” a parliamentary source from Berlusconi's party told Reuters.
Delegations from the PDL and the PD will meet separately with Napolitano on Tuesday to make their proposals for who should lead the country following February's inconclusive election.
Renzi has made no comment on the increasing support for him.
He may be reluctant to take on a job in which he would be dependent on Berlusconi for the success and the survival of his government. At the same time this may be precisely the reason that Berlusconi would be ready to support him.
For the PD, his candidacy would be seen as a desperate attempt to unite a party hit by deep internal divisions since the election. Party leader Per Luigi Bersani and his closest aides all tendered their resignations at the weekend.
“He (Renzi) is faced with the real challenge of a lifetime, if the day finishes as it has started; I wish him the very best,” PD foreign policy spokesman Lapo Pistelli said on Tuesday in an indication the party was considering backing Renzi.
Outgoing Prime Minister Mario Monti's centrist group Civic Choice said it would not oppose Renzi's candidacy.
The 87 year-old Napolitano is expected to make the appointment late on Tuesday or on Wednesday after completing his round of meetings with parties, raising the possibility that a government could be in place by the weekend.
Whether the new prime minister is Renzi, Amato or a surprise third figure, they are likely to forge a multi-party cabinet to take over from the technocrat government of Monti, who was appointed in late 2011.
Despite the market euphoria, a broad coalition between the right and left, which are far apart on most issues, might struggle for stability or the parliamentary backing needed for vital economic and political reforms.
The euro zone's third largest economy has been the most sluggish in Europe for more than a decade and mired in a deep recession since the middle of 2011, with no recovery in sight.
At the election the centre-left narrowly won a majority in the lower house but failed to win control of the Senate.
Its inability since February to cut a deal with either Berlusconi's centre-right or the shock new third force of Beppe Grillo's anti-establishment 5-Star Movement has left the country in limbo.
Renzi unsuccessfully challenged Bersani for the PD leadership last year and despite his popularity among the general public is viewed with suspicion by many in the deeply divided party.
Berlusconi has gone from strength to strength since the election, capitalising on the centre-left's crisis. An opinion poll on Tuesday by the Tecne polling agency gave the centre-right a clear lead of around 8 points.
5-Star, which won a quarter of the vote and speaks for millions of Italians disillusioned with an entire political class, says it will sit in opposition in parliament.
It will be joined by the leftist Left Ecology Freedom party, the former partner of the PD, which said it would also refuse to take part in a grand coalition government. - Reuters