Italy, Talks on Forming Government Break Down

Italy’s political gridlock deepened on Wednesday as talks to form a minority government broke down between the center-left leader, Pier Luigi Bersani, and the upstart Five Star Movement, a month after national elections failed to yield a majority.

International investors have intensified their scrutiny of Italy, the euro zone’s third-largest economy, since the Cyprus government imposed severe capital controls on depositors after securing a 10 billion-euro (about $12.9 billion) bailout of its banks. The euro dropped to a four-month low against the dollar on Wednesday. 

Mr. Bersani said on Wednesday that he would hold more consultations on Thursday and then report to President Giorgio Napolitano on whether he had enough support to cobble together a government. He reiterated that his Democratic Party offered the best chance for change and political stability in Italy, which is facing its own growing economic trouble.

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