Try as he might, Matteo Renzi just can’t push Italy’s economy into the eurozone’s premier league. 

Eurogroup chairman Jeroen Dijsselbloem rejected calls for banking union regulations to be loosened after weeks of falling bank shares, saying new European bail-in rules had caused investors to look “more critically” at risks borne by banks.

Europe’s landmark assessment of its banks just about scrapes the credibility test.

Prime Minister Matteo Renzi’s €10bn of tax cuts to low-income earners will allow Italy to narrowly avoid a contraction this year, his chief economic adviser has said.

Italy will settle the debt arrears it owes to private sector suppliers by the end of this year, economy minister Pier Carlo Padoan said in a newspaper interview yesterday, pushing back previous commitments.

The Italian government is considering options for a public backstop to cover potential shortfalls in bank capital ahead of European stress tests in October, two people with knowledge of the plan said.

European Union banks face their toughest probe yet in a bid to weed out the sector’s weaklings, the bloc’s chief watchdog said yesterday, announcing stress tests intended to help draw a line under the financial crisis.

Banks in Spain, Italy and Portugal face about €250bn in potential losses on their business loans over the next two years, the International Monetary Fund (IMF) said.

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

Italian politicians today elected centre-left leaders for both chambers of Parliament, paving the way for difficult talks to form a new government to get started.

Italy’s chance of stable government after elections this weekend may rely on forcing two awkward partners into coalition: former European Commissioner Mario Monti and an openly gay leftist he has vowed not to work with.

Musical chairs in European Parliament

Italian bank Monte dei Paschi di Siena sought to calm investors over a trading scandal that has caused its share price to slump and led to much finger-pointing ahead of general elections next month.

It’s “cash only” now for tourists at the Vatican wanting to buy museum tickets, souvenirs, and other services after Italy’s central bank decided to block electronic payments, including credit cards, at the tiny city-state.

It is “cash only” now for tourists at the Vatican wanting to pay for museum tickets, souvenirs and other services after Italy’s central bank decided to block electronic payments, including credit cards, at the tiny city-state.

France and Italy yesterday piled more pressure on the ECB to agree steps this week to reduce crippling borrowing costs for southern eurozone states.

Italy’s traditional goldsmiths are up in arms over a boom in the poorly regulated cash-for-gold sector that is making billions for the mafia as hard-up Italians rush to sell off their bling.

Italy’s economy will shrink by about 2% in 2012, though signs of recovery could start to appear at the end of the year, Bank of Italy governor Ignazio Visco has said.

The margin of Thursday’s endorsement of the EU fiscal treaty may have been greater than anticipated.

THE Italian cabinet met in emergency session last night under huge pressure after the cost of debt rose to levels similar to those that forced Ireland and Portugal to look for a bailout.

THE United States pressed Europe’s strongest economies yesterday to give “unequivocal” financial support to weaker euro zone states to overcome a debt crisis that threatens the world economy.

THE current and incoming heads of the European Central Bank (ECB) demanded yesterday that governments in Europe quickly implement a strengthening of a regional bailout fund and press ahead with wider reforms.

ITALIAN Economy Minister Giulio Tremonti pledged to meet European Central Bank demands for sweeping economic reforms in exchange for help in shielding Italy from the eurozone debt crisis.

FINANCIAL market pressure on Italy intensified last night, sucking Europe’s second biggest debtor nation deeper into the euro area danger zone and prompting emergency consultations in Rome, Madrid and other European capitals.

ITALIAN and Spanish 10-year bonds dropped yesterday, pushing yields up to euro-era records versus benchmark German bunds, on concern that slowing growth will hamper efforts to tame the nations’ debt loads.

Milan: Italian banks, including UniCredit SpA and Intesa Sanpaolo SpA, tumbled in Milan as the contagion from Europe’s debt crisis threatened to spread to the region’s third-biggest economy.

EU LEADERS appointed Italy’s Mario Draghi as the next president of the European Central Bank yesterday and said another Italian would step down from the ECB’s executive board early to smooth the process.

Rome: European Central Bank executive board member Lorenzo Bini Smaghi faced mounting pressure from the leaders of Italy and France to quit as part of their deal to allow fellow Italian Mario Draghi to become ECB president.

BANK of Italy Governor Mario Draghi has won a European Parliament committee’s endorsement to succeed Jean-Claude Trichet as head of the European Central Bank.

EUROZONE ministers pressed ahead last night with plans to make Greece’s private creditors share the costs of a second aid package amid European Central Bank (ECB) warnings that any coercive solutions could unleash a new wave of contagion.

GERMAN chancellor Angela Merkel backed Mario Draghi yesterday to become the next European Central Bank president, clearing the way for the Italian to succeed Jean-Claude Trichet from November.

ITALY’S Mario Draghi is a strong contender to take charge of the European Central Bank (ECB) but, as in a major horse race, the favourite can never be assured of victory, the Taoiseach said yesterday.

FRENCH President Nicolas Sarkozy threw his weight behind Mario Draghi’s candidacy to head the European Central Bank yesterday, giving a major boost to the Bank of Italy chief’s hopes of succeeding Jean-Claude Trichet.

VICTIMS of the Japanese earthquake, tsunami and snow blizzard are still being found by humanitarian groups and are receiving food, water and medical attention.

The Vatican said the seizure by police of €23m from a Vatican bank account and the investigation of two top bank officials was due to a simple misunderstanding that should be clarified quickly.

JUST when the Catholic Church didn’t need another scandal, Italian authorities have seized €23 million from a Vatican bank account and begun investigating top officials of the Vatican bank in connection with a money laundering probe.

Rome: The Bank of Italy said the euro region’s third-biggest economy will experience a “weak recovery” this year from the worst recession in more than 60 years as a higher-than-reported jobless rate constrains consumer demand.

A COMBATIVE Prime Minister Silvio Berlusconi vowed yesterday to govern with “even more grit” after Italy’s top court lifted his immunity and he dismissed corruption charges against him as “laughable”.

TOO many banks were over reliant on wholesale funding when the credit crunch blew up last August, causing a massive liquidity crisis in the global banking sector.

A Milan judge has ordered former Bank of Italy governor Antonio Fazio to stand trial on a charge of market rigging.

The resignation of Italy’s embattled central bank chief has cleared the way for the government to focus on reforming the nation’s scandal-tainted banking industry at a special cabinet meeting today.

Prosecutors have notified the embattled governor of the Bank of Italy that he is under investigation for his role in a takeover battle between two banks, and that they plan to question him, his lawyer said yesterday.

Italy is today said to be “paralysed” after the economy minister resigned amid a standoff with the Bank of Italy chief.