Monti moves to form new government

The appointment of Monti, an ex-EU commissioner, was announced by Italy's president on Sunday.

Monti said he wanted to build "a future of dignity and hope" for Italy's children.

The first test of his appointment will come with the opening of European financial markets on Monday.

Asian stocks have already risen in early trading. Hong Kong's Hang Seng index surged to 2.4% and the euro rose against the dollar on Asian markets.

Another test on Monday will come when Italian government bonds are auctioned.

The interest rate at which the bonds sell will reflect whether the markets have confidence in Monti's ability to rescue Italy from debt.

The former prime minister, Silvio Berlusconi, was forced to resign when the yield on Italian bonds rose to over 7% last week, the rate at which Greece, Ireland and Portugal were obliged to seek bailouts from the EU.

Monti, a 68-year-old economics professor, refused to set a timetable for the formation of a new government, and would not say who he planned to nominate as ministers. But he said consultations would start on Monday.

The formal confirmation of the new technocratic government could take several days.

Italy's borrowing costs have spiked, threatening the eurozone. Hailing Monti's appointment, EU leaders vowed to monitor Italy's austerity measures.

President Giorgio Napolitano held 17 meetings with senior politicians before nominating Monti as Prime Minister.

Most parties, including Berlusconi's, approved his nomination.

Monti promised he would act "with urgency" and said he would work with parliament "to get out quickly from a situation which has elements of an emergency but which Italy can overcome with a united effort".

Napolitano said the nomination was not about overturning the result of the elections of 2008 - but Italy needed a government that "could unite the diverse political forces in an extraordinary effort warranted by the current financial and economic emergency".

Asked about the lifespan of a Monti government, Napolitano said this depended on "the actions of the government, the reaction of the economy, of the markets, investors, of the European and international institutions".

Speaking in a recorded TV address, Berlusconi said he would support a technocrat government and redouble his own efforts in parliament to modernise Italy.

Most centrists and centre-left parties in the opposition have already pledged their support.

However, Berlusconi's main coalition ally, the Northern League, has withheld its support until Monti's policies have become clear.

Berlusconi, who had lost his parliamentary majority, resigned on Saturday after new austerity measures were passed by both houses of parliament.

In Brussels, European Commission chief Jose Manuel Barroso and EU President Herman Van Rompuy issued a joint statement welcoming Monti's appointment.

The Commission, they added, would continue monitoring "the implementation of measures taken by Italy with the aim of pursuing policies that foster growth and employment".

Monti's appointment comes two days after Greece, under even greater pressure from Brussels, inaugurated a technocrat government to cope with its debt problems.

Monti, a well respected economist, is exactly the sort of man that the markets would like to see take charge at this time of crisis, says the BBC's Alan Johnston in Rome, and he has support in many quarters.

But there is significant opposition to him within the country, and a feeling that Italy's troubles are just too deep for a mere change of government to make any rapid, significant difference.

The austerity package foresees €59.8bn in savings from a mixture of spending cuts and tax rises, with the aim of balancing the budget by 2014. Measures include sales of state property, a freeze on public-sector salaries until 2014 and measures to fight widespread tax evasion.

The Italian economy has grown at an average of 0.75% a year over the past 15 years.