Berlusconi denies he will resign

Italian prime minister Silvio Berlusconi has denied that he plans to resign imminently and clear the way for the country to repair its public finances.

Two senior Italian journalists, close to Berlusconi, earlier reported that the embattled leader could step down today or tomorrow.

But a spokesman for Berlusconi denied he had any intention of leaving.

"I spoke to the prime minister a short time ago and he told me the rumours of his resignation were baseless," Fabrizio Cicchitto, head of the parliamentary group of Berlusconi's PDL party said in a statement.

The statement contradicted reports from Franco Bechis, vice-director of the pro-Berlusconi Libero newspaper, who on Twitter said Berlusconi would resign on Monday night or Tuesday morning.

Giuliano Ferrara, editor of the Foglio newspaper and a former minister seen as extremely close to Berlusconi, also said on its website: "That Silvio Berlusconi is about to resign is clear. It is a question of hours, some say of minutes."

Markets responded positively to news that Berlusoni would step down. Italy’s FTSE MIB has reversed early losses to trade up 1.9 per cent while France’s CAC 40 has gained more than 63 points, or two per cent.

The FTSE 100 has also pared losses, moving from a low of 5,434 to 5,502 on the news.

Berlusconi faces a rebellion within his own government as his political allies have stepped back from supporting him over the past week and protesters rioted in Rome over the weekend.

He is also mid-way through four trials covering allegations from abuse of office and corruption to having sex with a minor.

Italy has €1.9 trillion (£1.6 trillion) of public debt, the third-highest in the world, equal to 120 per cent of its GDP.