Italy’s fractious ruling coalition struggled to bridge differences over a housing tax that threatens to create a new crisis for a government already severely strained by the legal turmoil surrounding Silvio Berlusconi.

Silvio Berlusconi: House arrest most likely outcome.

Former Prime Minister Silvio Berlusconi has returned to the political frontline after months in the shadows, vowing to abolish a key tax on homes in remarks likely to stoke investors’ jitters about Italy’s future after an election next spring.

FRANCE came under heavy fire on global markets yesterday reflecting fears that the eurozone’s second biggest economy is being sucked into the debt crisis after a warning that Paris’s inability to adapt should be “ringing alarm bells”.

ITALY’S opposition said yesterday it would present a no-confidence motion against one of Prime Minister Silvio Berlusconi’s most loyal ministers, in another blow for the already wounded premier.