Italian PM Silvio Berlusconi Quits Power

Italian Prime Minister Silvio Berlusconi quit power on Saturday to loud cheering from a crowd of thousands in Rome after a wave of market panic that has shaken the Eurozone brought his rule to an end.

Berlusconi formally submitted his resignation to President Giorgio Napolitano, who announced he will now hold consultations on the formation of a new transition government as Italy rushes to fill the political vacuum.

"I am deeply embittered," 75-year-old Berlusconi, who has been in power for 10 of the past 17 years, told reporters after his waving following his last cabinet meeting was greeted by shouts of "Buffoon!" and "Go Home!"

The billionaire tycoon resigned following parliamentary approval of a package of economic reforms that he had promised the European Union.

"We hope today marks the beginning of a new spring in Italy," Massimo Donadi, a lawmaker from the opposition Italy of Values party.

Dario Franceschini of the main opposition Democratic Party said: "Today the curtain falls on a long and painful phase of Italian political history.

"The country wants to turn the page and start again," he added.

In the streets of central Rome, crowds gathered chanting "Resign! Resign!" and holding up placards reading: "Bye Bye Silvio!” Motorbikes streamed past waving Italian flags and an impromptu choir sang: "Hallelujah!"

The prime minister waved to the crowd after his last cabinet meeting despite the jeering. There were also small groups of supporters who shouted "Silvio! Silvio!" and said they were bereft that their beloved leader was leaving.

The 68-year-old economist Monti has a formidable reputation as the former top trust-busting bureaucrat in Brussels who took on US corporate giants Microsoft and General Electric, but he has no experience in political office.

European Central Bank president Mario Draghi, the former governor of the Bank of Italy who took over in Frankfurt just this month, met with Monti in Rome on Saturday in what was interpreted as an implicit endorsement.

International Monetary Fund chief Christine Lagarde also added her voice to calls from US President Barack Obama, French President Nicolas Sarkozy and others for Italy to form a new government instead of declaring early elections.

Berlusconi's hand was forced after a parliamentary revolt on Tuesday left his center-right coalition in a minority on a procedural vote.

But he refused to step down until lawmakers had approved a set of reforms.

The measures include state asset sell-offs, reforms to boost competition in the labor market and moves to ease notoriously heavy bureaucracy for firms.

Monti has received endorsements from across the political spectrum and there were reports on Saturday that Berlusconi's People of Freedom (PDL) party would also support him despite the premier previously calling for early elections.

Napolitano would be forced to dissolve parliament and call early elections if there is no majority behind a transition government -- a prospect that had spooked the financial markets in recent days.

Under the current timetable, the next elections are only due in 2013.

There was little grief among ordinary Italians at the political demise of Berlusconi, with latest polls giving the media tycoon an approval rating of just 22 percent following a wave of sex scandals and legal troubles.

Many in the international community also want to see the back of him.

The latest cover of The Economist news weekly, which has had a long feud with Berlusconi since declaring him "unfit to lead Italy" in 2001, carried a photo of the tycoon preening himself with the headline: "That's all, folks."

Following Berlusconi's resignation announcement on Tuesday, Italy's long-term borrowing costs rose above 7.0 percent -- a dangerous level that could make the country's debt unsustainable within months.

Reports of Monti's impending nomination helped ease the jitters.

But the toxic mix of a 1.9 trillion euro ($2.6 trillion) debt, an extremely low growth rate and high borrowing costs has raised concerns that the Eurozone’s third largest economy may be forced to seek a bailout.

The IMF and the European Financial Stability Facility have both reportedly offered financial help. Economists warn that, unlike fellow Eurozone members Greece, Ireland and Portugal, Italy may be "too big to bail".

Berlusconi reluctantly agreed to special EU-IMF monitoring of Italy's accounts at a G20 summit last week, prompting his opponents to carp that the country is now effectively "under external administration".