Italy election: Global stocks rally as politicians seek to resolve political gridlock

BRUSSELS, Belgium — Global stock markets rebounded Wednesday as Italian politicians searched for a way out of the political gridlock following Monday’s inconclusive election result, the Associated Press reported.

Shares were pummeled on Monday and Tuesday after the Italian election failed to deliver a clear winner, setting the stage for sworn enemies to form a coalition government in order to avoid another ballot.

But this won’t be easy.

Pier Luigi Bersani, whose Democratic Party won a narrow victory in the lower house of parliament but lacks the numbers in the senate to form government, has called on Beppe Grillo of the populist 5 Star Movement to help govern, Bloomberg reported.

But Grillo responded with a barrage of internet insults.

"Bersani: speaking corpse" said a headline on his blog above a photomontage of the Democratic Party (PD) leader dressed as a ghost from a well-known 1950's movie.

"Bersani is a political stalker making indecent proposals to the M5S," Grillo said. "We won't give a vote of confidence to PD, or anyone else."

Grillo recalled that during the campaign, Bersani referred to him as "an indecent macho, like Berlusconi" and an antidemocratic "fascist of the web" who would lead Italy to ruin.

If Grillo persists in his refusal to enter political deals, Bersani will be forced to seek an arrangement with former Italian Prime Minister Silvio Berlusconi — or throw in the towel and accept another election.

Grillo may be hoping for the latter — and the chance to continue his "revolution" by becoming top party.

“The people that have destroyed this country are now trying to get back together to carry out reforms to the things that they have destroyed. The public won’t accept that anymore,” Grillo said.

Berlusconi's conservative coalition came “within a whisker” of victory in the lower house, the Wall Street Journal reported.

Sharing power with Berlusconi would be a bitter pill for Bersani to swallow given he has blamed his flamboyant rival for “ruining Italy,” EurActiv reported.

Berlusconi, however, appears willing to let bygones be bygones.

After the release of Monday’s results, Berlusconi said a new set of elections was “not useful.”

“We all need to reflect on what we can do for Italy. … I don't think Italy can do without being governed," said Berlusconi, whose comments have been interpreted as an olive branch to Bersani.

Italy's respite from the markets today was thanks largely to reassuring news for the world economy from the US.

The government was also able to sell $8.5 billion in bonds, although its borrowing costs hit their highest level in five months. Moody's warning that it could further cut Italy's credit rating if reform falters is also damaging confidence.

European leaders continued to press Italy's politicians to stay on the path of reform and fiscal discipline.

"It is now up to Italian political leaders to assume responsibility, compromise and form a stable government," tweeted Herman Van Rompuy, president of the European Council. "Nor for Italy is there a real alternative to continuing fiscal consolidation and reforms."

Germany's Social Democratic Party leader Peter Steinbruck went further, telling a political meeting he was "appalled that two clowns have won," in a reference to Grillo and Berlusconi.

Italy's figurehead President Giorgio Napolitano promptly scratched a meeting with Steinbruck from the agenda of his ongoing visit to Germany.

Paul Ames contributed to this report from Brussels.