Italy awaits market reaction to Monti exit soon

"It's clear that he (Monti) feels free to decide. He's thinking about it, and many are pushing him to take a step" into politics, Corriere della Sera's editor, Ferruccio de Bortoli wrote.

He has been widely praised by economic analysts, central bankers and many European leaders.

"Mario Monti's government has achieved great things in a short period of time — won back the confidence of investors, moved forward budget consolidation," Joerg Asmussen, a German member of the European Central Bank's executive board, was quoted as telling Germany's Bild daily.

A London-based analyst at UniCredit, Erik F. Nielsen, said in his weekly comments Sunday that he wasn't worried that Berlusconi was running again, but warned that "you should expect some short-term market reactions."

Nielsen, the Italian bank's global chief economist, said there would probably be a sell-off in Italian assets Monday morning, followed by some pressure into Thursday's bond auction. But "I am not seriously worried about the direction of policies in Italy — and if Monti were to take a clear stand in the election, I suspect that the rally could be back on before long."

Defying opinion polls that indicate Berlusconi's party's popularity has taken a dive, to under 15 percent, the media baron announced on Saturday that he was running to regain the premiership, shortly before Monti's own decision to step down was revealed by Napolitano.

Possibly banking on appealing to his populist base, Berlusconi has vowed to again abolish the property tax on primary residences that Monti quickly reinstated as part of revenue-building measures for state and local coffers. The tax had been abolished by Berlusconi as part of a campaign promise during his successful 2008 run for office.

Central banker Asmussen added a warning: "Whoever governs Italy, a founding nation of the EU, after the elections will have to continue this course with the same earnestness" that Monti employed.

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AP reporter Geir Moulson contributed from Berlin.