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Uncertainty high as Italy premier-designate tweaks Cabinet

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ROME (AP) – Italy’s premier-designate Carlo Cottarelli met briefly with Italy’s president on Wednesday amid continued market turmoil and uncertainty about the prospects of his proposed government taking off.

Milan’s stock index opened slightly higher Wednesday after Asian markets slid on investor concern that a new election could become a referendum on whether Italy will stick with the euro currency. Investors dumped Italian government bonds, driving borrowing costs higher for Europe’s third-largest economy.

The uncertainty rose after President Sergio Mattarella’s designation of Cottarelli, a former IMF official, to head a politically neutral government failed to calm markets. The appointment also riled Italy’s populists, whose attempts to form a government were quashed by Mattarella over their designation of a euroskeptic economy minister.

Premier-designate Carlo Cottarelli, center, gets in a car as he leaves his hotel, in Rome, Wednesday, May 30, 2018. Cottarelli has returned to the presidential palace for informal consultations amid continued market turmoil and uncertainty about the prospects of his proposed government. (Angelo Carconi/ANSA via AP)

Cottarelli returned to Mattarella for brief informal discussions Wednesday morning after asking for more time to come up with a proposed list of cabinet ministers. His unexpected delay in forming a Cabinet fueled concerns about the prospects of his government, given the majority of lawmakers have made it clear they won’t vote favorably in mandatory confidence votes in Parliament.

Late Tuesday, the head of the 5-Star Movement, Luigi Di Maio, suggested a renewed effort to form a 5-Star-League government, backing off his threat of launching impeachment proceedings against Mattarella and insisting that the two blocs still enjoyed a parliamentary majority.

The 5-Stars and League had refused Mattarella’s demand for a different economy minister, insisting on Paolo Savona, a former industry minister who has questioned whether Italy should ditch the euro. At a rally in Naples, Di Maio suggested the 5-Stars would be willing to give it another shot.

“We’re ready to reconsider our position in the sense that if we made a mistake – something I doubt – we’ll say so, but now we should respect the will of the people,” he said.

But League leader Matteo Salvini made clear Wednesday he preferred early elections, saying it was up to Mattarella to now chart the way forward since he rejected the proposed 5-Star-League cabinet.

“I say this with all possible respect: Mattarella, explain to us how we can get out of the problem,” he said. “The sooner we vote the better.”

Cottarelli had said elections could come “after August,” but Tuesday’s market reaction spurred some lawmakers to propose a late July date, previously unthinkable given it would be hampered by low voter turnout due to Italian summer vacations.

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Colleen Barry contributed from Milan.

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