Berlusconi seeks to reassure roiling markets

Italy's president is seeking to reassure roiling markets that Premier Silvio Berlusconi will resign and says Italy will either have a new government or early elections soon.

President Giorgio Napolitano says concerns about whether Berlusconi would actually leave office are completely unfounded. He said economic reforms demanded by the European Union would be passed by parliament "in a matter of days" and that he would work to avoid a prolonged period of political uncertainty.

Napolitano issued the statement after markets pounded Italy on Wednesday, sending its key borrowing rate well above the 7 percent level that eventually forced other eurozone countries like Greece and Portugal to seek bailouts.

Meanwhile, the Dow Jones industrial average is down 210 points in morning trading after Italy's interest rates soared. Higher borrowing costs are a sign that Europe's debt crisis had spilled into the third-largest economy in the euro bloc.

The Dow dropped 210 points, or 1.8 percent, to 11,956 as of 11:45 a.m. Eastern. It had been down as many as 317 points in the first hour of trading.

The S&P 500 lost 25, or 1.9 percent, to 1,251. The S&P is now below where it started the year.

The Nasdaq slid 57, or 2.1 percent, to 2,670.

The yield on the benchmark Italian government bond spiked above 7 percent, a sign that investors are losing faith in the country's ability to repay its debt.