Spain's borrowing costs have been rising as investors in the bondmarket fear it could become the next euro area nation to fall victim to the debt crisis.
"The longer the political vacuum persists, the more vulnerable Italy's bondmarket becomes at a time when sentiment towards the euro zone has already taken a knock" from Cyprus, said Nicholas Spiro, head of Spiro Sovereign Strategy in London.
The euro crisis has spread to Italy, the world's third-largest bondmarket, which means the stock of rich-world government debt that is considered safe has shrunk dramatically.