Wall Street rises as Berlusconi vows to quit

Stocks on Wall Street rose for a second day as Italian Prime Minister Silvio Berlusconi's vow to resignation raised hopes of breaking the debt impasse.

Mr Berlusconi has confirmed an earlier statement from the office of President Giorgio Napolitano that Mr Berlusconi would resign after the 2012 budget bill is approved.

Meanwhile, on Wall Street, stocks rebounded and finished with a 100-point gain in the Dow Jones Industrial Average after being in the red until the Italian announcement came midway through the session.

At the close (10am NZ time), the Dow was up 101.79 points, or 0.6%, to 12,170.18. The S&P 500 index was up 1.2% at 1275 while the Nasdaq Composite was also up 1.2% at 2727.49.

Events in the Italian parliament dominated financial markets activity during the trading day in New York.

An early budget vote in the parliament, in which a majority of MPs abstained, revealed Mr Berlusconi’s centre-right government no longer had a majority.

In the [president's statement, Mr Berlusconi expressed worries over "the urgent necessity to provide precise answers" to Italy's European partners with the approval of the 2012 budget bill, to which growth-boosting measures required by the EU should be attached.

After the resignation, President Napolitano started consultations with all the political parties on the possible future options. These are likely to include a "technocratic" interim government that will steer through the budget, which contains EU-driven reforms to reduce Italy's burgeoning debt.

The resignation also takes the heat off Italian government bonds, which have risen to nearly 7% and make Italy's public debt, which exceeds 100% of its gross domestic product, unsustainable.

Italy is the eurozone's third largest economy and is considered "too big to bail."

Meanwhile in Greece, where the prime minister has also resigned, talks are continuing on the shape of a new cross-party government that will temporarily assume power and implement the €130 billion EU bailout plan.

Prime Minister George Papandreou agreed to step aside at the weekend as a condition of forming the new government. An announcement on the interim leader is expected later today (NZ time).

EU finance governments say they are ready to sign off on the first tranche of €8 billion once the new government has ticked off an already agreed list of reforms such as privatisation of state-owned companies.

Other markets: Europe up, Asia mixed
European stock markets closed higher but pared gains in late trade after Mr Berlusconi lost his parliamentary majority in a closely watched vote.

The Stoxx Europe 600 index rose 0.9% to end at 240.50 after surging to an intraday high of 243.27.

The French CAC 40 index rose 1.3% to 3143.30, the UK’s FTSE 100 index rose 1% to 5567.34. and the German DAX 30 index ended up 0.6% at 5961.44.

Asian markets ended mixed as caution over Europe's debt woes persisted. Tokyo shares were weighed down by a 29% plunge in Olympus shares after the company admitted covering up huge investment losses.

The Nikkei Stock Average ended down 1.3% at 8655.51 and Korea's Kospi lost 0.8% to 1903.14.

China's Shanghai Composite slipped 0.2% to 25,03.84, Hong Kong's Hang Seng Index ended flat after a choppy session at 19,678.47 and Australia's S&P/ASX 200 index gained 0.5% to 4293.80.

Commodities: Oil, gold up
Oil futures extended a rally that has added more than $US20 on the price in just over a month.

Light, sweet crude for December delivery was up 77USc, or 0.8%, to $US96.29 a barrel in New York. Meanwhile, Brent crude on the ICE Futures Europe exchange was unchanged at $US114.56 a barrel.

Gold prices stood firm after reaching six-week highs on Monday. The contract for November delivery was up $US1.90, or 0.1%, at $US1,792.20 an ounce in New York.

Currencies: Euro drops
The euro gave up its gains against the US dollar after an Italian budget cleared parliament without an absolute majority.

The euro fell below $US1.38 after trading as high as $US1.3845 but still up slightly from $1.3777 late on Monday in New York.

The euro declined from its three-week high against the Swiss franc on the back of conflicting statements by members of the Swiss National Bank about further intervention.

The euro fell to as low as 1.2320 francs after earlier hitting a three-week high of 1.2457 francs,

The dollar was at ¥77.79, compared with ¥78.06, while the euro was at ¥107.30 compared with ¥107.56.

The UK pound was trading at $US1.6075, compared with $US1.6058.