Markets breathe easier as Italy government sworn in

Giuseppe Conte has given Italian President Sergio Mattarella back his mandate to form a government

Giuseppe Conte has given Italian President Sergio Mattarella back his mandate to form a government

Italy's anti-establishment 5-Star Movement and the right-wing League succeeded Thursday in forming western Europe's first populist government, which will be headed by a political novice whose first try was rejected four days earlier as too risky for the Italian economy.

The ministers feature a mix of 5-Star and League loyalists and a political neophyte in the form of Premier Giuseppe Conte, who was still teaching his law classes at the university in Florence up until Thursday.

The anti-establishment Five Star Movement and the anti-euro League, who got the most votes in the inconclusive March election, have promised a no-confidence vote which would force new elections.

Di Maio will be the new joint industry and labor ministry, aiming to introduce a basic income for job seekers and poor families; Salvini is the interior minister, with a goal of cracking down on undocumented migrants.

In the March election, no party or coalition had received enough votes to form a government on its own.

Salvini canceled his scheduled appointments in northern Italy to fly to Rome and was expected to have a private meeting with Di Maio, a political source said.

The leader of the 5-Star Movement, Luigi Di Maio, and League leader Matteo Salvini said in a statement Thursday that they have achieved "the conditions for a political government".

The Five Star Movement came out as the single largest party in Italy's March elections, capturing almost a third of the vote.

The country's new government is scheduled to be sworn in Friday at 4 p.m. (10 a.m. ET), an event likely to trigger reverberations across Italy.

"It's the celebration for all of us, of our republic", he said.

Wednesday's development came as financial markets calmed after a rout a day earlier, when investor concerns about Italy's finances prompted the biggest one-day rise since 1992 in Italian two-year bond yields and dented the euro's exchange rate.

The scholar already served as advisor to Italy's Prime Minister for EU affairs and privatization of state-owned companies between 1993 and 1995, and as Minister of European Affairs between 2011-2013 and 2013-2014, according to his online resume.

The U.S. Embassy in Rome on Friday warned U.S. travelers to beware of three separate demonstrations set to take place Saturday, saying they could become "unruly or violent".

After the initial coalition attempt failed on Sunday, Mattarella named former International Monetary Fund official Carlo Cottarelli as interim prime minister.

Public resentment over what was perceived as fellow European Union nations' failure to help ease the financial and logistical burden on Italy in caring for the flood of migrants helped boost the League's popularity.

The parties' new economy minister, another little-known figure, economics professor Giovanni Tria, has been critical of the EU's economic governance, but unlike Savona he has not advocated a "plan B" for possibly exiting the euro.

The new government delighted leaders of an increasingly bolder far-right in European politics.

Mr Salvini has said he would "seriously consider" an offer on Wednesday from Mr Di Maio to resurrect their bid to govern together.

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