Economist Mario Monti Picked to Form New Italian Govt.

Former European commissioner Mario Monti was nominated Sunday to replace Silvio Berlusconi as head of a new cabinet charged with battling an unprecedented crisis in the eurozone's third largest economy.

"Italy must again be and must be increasingly an element of strength, not weakness in a European Union that we helped found and in which we should be protagonists," the 68-year-old economics professor told reporters.

After receiving the nomination from President Giorgio Napolitano, he said he would work "to get out quickly of a situation which has elements of an emergency but which Italy can overcome with a united effort".

Monti received the mandate to form a government on Sunday after hours of political talks but its exact composition is set to be unveiled in the coming days before a confidence vote in parliament formally gives it power.

Silver-haired Monti received endorsements from Berlusconi's center-right People of Freedom (PDL) party and the main opposition center-left Democratic Party (PD).

"We have agreed to the nomination of Professor Monti," PDL leader Angelino Alfano told reporters after the talks. PD head Pier Luigi Bersani said he supported "an emergency, transition government of technocratic character".

Napolitano has raced against time to have the beginnings of a new government in place by the time financial markets open on Monday, when Italy will face its first bond auction test since Berlusconi's exit amid high borrowing costs.

A defiant Berlusconi meanwhile said he would "redouble" his efforts in parliament "from tomorrow". "I will not give up until we have succeeded in modernizing Italy," he said in a video message broadcast on Italian television.

Hundreds of supporters rallied in front of Berlusconi's residence in Rome, a day after thousands of people partied in the streets of the Italian capital booing the scandal-tainted premier and cheering his resignation.

In his first comments since stepping down, Berlusconi wrote a letter to a small conservative party saying he wanted to work on a "path to government" and issuing scathing comments about the parliamentary revolt that toppled him.

Berlusconi, 75, said he was "proud of what we have managed to do in these three and a half years marked by an international crisis without precedents", condemning the "petty blackmail and opportunism" of recent days in parliament.

Berlusconi is still a deputy for the People of Freedom party. He was forced to resign on Saturday by a parliamentary revolt and a wave of market panic.

His resignation triggered an explosion of joy with people uncorking bottles of champagne and dancing in the streets but analysts warn Italy faces the daunting task of implementing painful austerity and long-delayed reforms.

Fears of a prolonged political and financial crisis have pushed up Italy's borrowing costs to record levels, setting off alarm bells around Europe and there were few international leaders wishing Berlusconi well on Sunday.

Russian President Dmitry Medvedev spoke to Berlusconi to thank him for a "great personal contribution" to bilateral ties after Prime Minister Vladimir Putin said he would miss the man he called "one of the last of the Mohicans".

A larger-than-life billionaire in power for 10 of the past 17 years, Berlusconi looked visibly shocked as he quit power on a momentous night and said he was "deeply embittered" at the scenes of jubilation.

Italian newspapers bade goodbye to Berlusconi, hailing "the end of an era".

The departure "marks the end of a carnival reign", said Curzio Maltese, a columnist for the left-leaning La Repubblica daily. The anti-Berlusconi daily Il Fatto Quotidiano said it was "the end of a nightmare".

International leaders including U.S. President Barack Obama and French President Nicolas Sarkozy have pushed hard for Italy to move quickly now to form a new government and adopt economic reforms.

The European Union, which together with the International Monetary Fund is now auditing Italy's accounts, said it would continue to monitor Italy's reforms and that the country may need to pass extra austerity measures in order to meet its economic targets.

Reports of Monti's impending nomination helped ease market jitters but the toxic mix of a 1.9 trillion euro ($2.6 trillion) debt, an extremely low growth rate and high bond rates is keeping everyone on their toes.

The IMF and the European Financial Stability Facility have both reportedly offered financial help.

Some economists however have warned that, unlike fellow eurozone members Greece, Ireland and Portugal, Italy may be "too big to bail".