Italy, Euro Zone | featured news

Italian President Giorgio Napolitano expressed despair on Tuesday at fierce criticism of his latest plan to end a post-election deadlock that has raised fears of months of instability in the euro zone's third largest economy.

Italy's new parliament met on Friday for the first time since last month's inconclusive election with no sign of a deal to end the stalemate and yield a government able to address the deep problems in the euro zone's third-largest economy.

European Union officials pushed on Saturday to accelerate moves to stem the bloc's long debt crisis as Italian premier Mario Monti warned that economic suffering was fuelling divisive nationalism on the continent.

Credit rating agency Moody's cuts Italy's standing and warns the country is likely to see a sharp rise in borrowing costs.

Italy said on Tuesday it may want to tap euro zone aid to ease its borrowing costs as finance ministers struggled to convince markets they are getting a grip on the bloc's debt crisis, which a top European Central Banker said could escalate.

Italy and Spain, battling searing market pressure in the euro zone's widening debt crisis, blocked agreement on measures to promote growth at a European Union summit on Thursday to demand urgent action to bring down their borrowing costs.

Italy put forward a proposal at a G20 summit in Mexico on Tuesday for the euro zone's rescue funds to start buying the debt of distressed European countries, and the idea is expected to be discussed at a meeting of leaders in Rome on Friday.