Italian directories publisher Seat Pagine Gialle SpA is at the center of a dispute with its stakeholders that may see the company put into insolvency if an agreement isn't reached by the end of the month, said market participants Wednesday, Dow Jones Daily Bankruptcy Review reported. Seat PG, with total debt of EUR2.7 billion, stated last week that it wouldn't pay a EUR52 million coupon due on Oct. 31 on its EUR1.3 billion subordinated bond via a special purpose funding vehicle called Lighthouse.

Top European Central Bank officials offered a skeptical appraisal of Europe's latest plan to solve its debt crisis, suggesting that the central bank may be forced to maintain the emergency measures it has adopted to keep the problems from spreading, The Wall Street Journal reported.

As the continent's policy makers continue to grapple with the unfolding crisis that began with debt problems in Greece, investors' focus has turned to Italy, the euro-zone's third largest economy, and a nation saddled with one of its heaviest debt burdens, The Wall Street Journal reported. Worries that the government won't be able to keep up payments on its debt have driven up the yields on Italy's sovereign bonds, which is pressuring the Italian banks that own them. The world's oldest bank, Siena-based Banca Monte dei Paschi di Siena SpA, is now caught in the storm.

Moody's lowered its rating on Italy's bonds by three notches on Tuesday, saying it saw a "material increase" in funding risks for euro zone countries with high levels of debt and warning that further downgrades were possible, Reuters reported. The agency downgraded Italy to A2 from Aa2, a lower rating than it holds on Estonia and on a par with Malta and kept a negative outlook on the rating.

Lenders to Ferretti are exploring a second debt restructuring as the Italian luxury yacht maker is running short of liquidity and could breach covenants on its 600 million euros ($805 million) of loans, banking sources said, Reuters reported. The lenders, which own Ferretti following a 2009 debt for equity swap, are working with the debt advisory group at Rothschild and Ernst & Young to determine how much new money the company needs and how much more debt it needs to write down, the sources added.

Italian Prime Minister Silvio Berlusconi yesterday strongly defended his government in the wake of the decision by ratings agency Standard and Poor’s to downgrade Italy, reducing its sovereign debt rating from A+/A-1+ to A/A-1, the Irish Times reported. In a report issued late on Monday night, S&P had questioned the “government’s ability to respond” to the current euro zone crisis.

The Italian government moved Tuesday to revamp its embattled austerity package, in a bid to shore up political support for a plan that has drawn a wave of public protest, The Wall Street Journal reported. The government's latest raft of proposals—a mix of tax increases and pension overhauls—aims to cover funding gaps that emerged in Italy's €45.5 billion ($64.15 billion) austerity package after Rome hastily stripped away unpopular parts of the plan.

Italy's industry minister has dismissed widespread calls for Rome to speed up its timetable for passing budget-tightening measures, rebutting criticism that the Italian government's austerity package isn't tough enough to dig the country out of the euro-zone debt crisis, The Wall Street Journal reported. In an interview late on Sunday, Paolo Romani said the government was sticking to its plans to push the measures through Parliament by Sept. 15.

The Italian government backtracked on parts of its widely criticized austerity package on Monday, scrapping a tax on high earners and scaling back cuts to local authority funding, The Globe and Mail reported. In a statement after seven hours of talks at Prime Minister Silvio Berlusconi’s home outside Milan, the government said it would also exclude years spent at university and military service from retirement age calculations, delaying retirement for some people.

Italy, under pressure from financial markets and the European Central Bank to overhaul its economy, is trying to tackle one of its most persistent economic flaws: the lack of opportunities for young people, The Wall Street Journal reported. Italy's Parliament is due to start debating a package of reforms aimed at speeding up growth in late August that includes a tentative move to relax layoff rules. That, the government hopes, will encourage business to take more risks on hiring new, young workers.