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.

Silvio Berlusconi’s ability to pass a €45.5bn austerity decree swiftly through parliament, as demanded by the European Union, is being jeopardised by a slew of amendments proposed by his own coalition and opposition parties, the Financial Times reported. Although the centre-right government was able to speedily approve the fiscal adjustment package, it appears that the parliamentary procedure, due to start next week in Senate commissions, will turn into a time-consuming battle of strength for Mr Berlusconi and will challenge the credibility of his parliamentary majority.

Italian Prime Minister Silvio Berlusconi's government unveiled measures Friday to balance Italy's budget by 2013, a year earlier than planned, by slashing €45 billion ($64 billion) in public spending in a bid to pull Italy back from the brink of the euro-zone crisis, The Wall Street Journal reported. The measures, composed of tax increases and spending cuts, seek to retool a fiscal-tightening package the government passed in July that disappointed investors, driving Italy's borrowing costs up to euro-era highs.

France, Italy, Spain and Belgium have banned all short selling of financial stocks for 15 days in response to sharp share price falls this week, but they failed to convince other regulators to go along with a European Union-wide prohibition, the Financial Times reported. The bans on the controversial practice where investors aim to profit from price falls will take effect on Friday morning. But other main markets, including the US and the UK, have said they have no plans to follow suit.

Just a few months ago, European policymakers were scrambling to erect barricades protecting Spain from the marauding sovereign-debt crisis. But now, suddenly, it is Italy in the crosshairs—deeply transforming Europe's problem and putting policymakers in full retreat, The Wall Street Journal reported. What was a battle to avoid a costly bailout has now become a push to avoid a doomsday scenario. "The line has shifted from Spain to after Spain," said Carsten Brzeski, senior economist at ING in Brussels.