Italy suffers market jitters as risk of government crisis grows

Markets reacted nervously on Monday as Italy's fragile left-right coalition government appeared on the brink of collapse over former premier Silvio Berlusconi's legal woes, dpa reported. The main index on the Milan stock exchange ended the day's trading down by 2.1 per cent. Berlusconi's family firm, Mediaset, suffered from the worst single drop, shedding more than 6 per cent of its value. Earlier this month, Berlusconi was sentenced on final appeal to four years' imprisonment, with a three-year remit, for tax fraud. His supporters say they will bring down the government unless a way is found for their leader to keep his Senate seat. They have to work around a probity law that says people convicted to more than two years' imprisonment cannot sit in parliament. Berlusconi was also handed down a public office ban, but a lower court has yet to say how long it should last. The centre-left Democratic Party (PD), which is part of the ruling alliance with Berlusconi's People of Freedom (PDL), has so far refused to find loopholes that might save the former premier's political career. Berlusconi's party has threatened to walk out of the coalition unless the levy is scrapped completely. Several government ministers have warned that it would be too expensive, and have suggested keeping the tax in place for wealthy homeowners. Amid the uncertainty about his willingness to force a political crisis, Berlusconi issued a statement urging his backers "not to issue statements and interviews" that could heighten political tensions and threaten the PDL's party unity.