Fears Italy will be next in eurozone debt crisis

European Council president Herman Van Rompuy has called an emergency meeting of officials dealing with the eurozone debt crisis this morning over concerns that it could spread to Italy, the region's third largest economy.

The talks have been organised after a sharp sell-off in Italian assets on Friday, which has increased fears that Italy, with the highest sovereign debt ratio relative to its economy in the euro zone after Greece, could be next to suffer in the crisis.

European Central Bank president Jean-Claude Trichet will attend the meeting along with Jean-Claude Juncker, chairman of the region's finance ministers, European Commission president Jose Manuel Barroso and Olli Rehn, the economic and monetary affairs commissioner. A second international bailout of Greece will also be discussed.

The spread of the Italian ten-year government bond yield over benchmark German Bunds hit euro lifetime highs on Friday.

Shares in Italy's biggest bank, Unicredit Spa, also fell 7.9 per cent, partly because of worries about the results of stress tests of the health of European banks, which are due to be released this coming Friday.

The leading Italian stock index sank 3.5 per cent.

The market pressure is partly due to Italy's high sovereign debt and sluggish economy, but also because of concern that prime minister Silvio Berlusconi may be trying to undermine and even push out finance minister Giulio Tremonti, who has promoted deep spending cuts to control the budget deficit.

"We can't go on for many more days like Friday," a senior ECB official said. "We're very worried about Italy."

Today's emergency meeting will precede a previously scheduled gathering of the euro zone's 17 finance ministers to discuss how to secure a contribution of private sector investors to the second bailout of Greece, as well as Friday's results of the stress tests of 91 European banks.