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European Officials Discuss Debt Crisis, Italy Vows Action

Italian Finance Minister Giulio Tremonti, left, speaks with Greek Finance Minister Evangelos Venizelos during a meeting of eurozone finance ministers at the EU Council building in Brussels, July 11, 2011

As European officials discuss how to prevent the eurozone debt crisis from spilling over into bigger economies, Italy's finance minister vowed its latest debt-cutting measure will be approved as fast as possible.

Financial markets have been unsettled as debate continues on a rescue package for Greece. Italy is one of the most affected countries.

Stocks and government bonds fell sharply Monday as investors cut their exposure to Italy on fears the eurozone's third-biggest economy could fall into the bloc's sovereign debt crisis.

German Chancellor Angela Merkel urged Italy to pass a government-proposed austerity package, adding she is confident the country would do what is necessary to shore up stability in the eurozone.

Finance Minister Giulio Tremonti said Italy would send markets a strong signal, adding the austerity package would be approved within a week.

The leader of Italy’s industrialists organization, Emma Marcegaglia, says with the spread so high, the austerity measure must be approved immediately because Italy needs to show cohesion. She says this is of fundamental importance.

Finance Minister Tremonti has pledged the nearly $50 billion budget-cutting measure will bring Italy's deficit down to 0.2 percent of GDP by 2014.

Italy has a heavy debt load of around 120 percent of economic output, and has not had any trouble borrowing to refinance it. But it has weak growth prospects, an expensive pension system and lagging productivity.