The Italian parliament is working on approving a €40 billion ($57.05 billion) austerity plan by Sunday, officials said, a fast timetable aimed at keeping Europe's debt crisis from infecting the continent's third-largest economy, The Wall Street Journal reported. Silvio Berlusconi's conservative governing coalition two weeks ago unveiled the austerity measures, which include public-sector wage freezes, higher fees for doctor visits and fewer transfers of funds from the central state to local administrations.

Italian President Giorgio Napolitano Monday appealed for “national cohesion” as the Italian economy came under pressure amid fears the state could become the next victim of the euro zone’s debt crisis, the Irish Times reported. For the second consecutive trading day, the Italian stock exchange registered a loss, closing down 3.96 per cent, while the much-quoted spread between Italian government bonds and German bonds reached its highest figure since the introduction of the euro, at over three percentage points.

European Council President Herman Van Rompuy has called an emergency meeting of top officials dealing with the euro zone debt crisis for Monday morning, reflecting concern that the crisis could spread to Italy, the region's third largest economy. European Central Bank President Jean-Claude Trichet will attend the meeting along with Jean-Claude Juncker, chairman of the region's finance ministers, European Commission President Jose Manuel Barroso and Olli Rehn, the economic and monetary affairs commissioner, three official sources told Reuters.

Fissures among Europe’s currency partners are becoming even deeper and more widespread than was previously evident, raising new doubts about whether the group can resolve the regional debt crisis that has simmered for more than a year, the International Herald Tribune reported. The markets seem to reflect the growing discord within the 17-member euro zone currency union, barely a year after European governments came together with a 750 billion euro ($1 trillion) safety net for debtor-nation members.

Parmalat SpA's board said Tuesday it considered the price of EUR2.60 that France's Groupe Lactalis SA is offering for every share it does not already own in the Italian dairy group as inadequate, Dow Jones Daily Bankruptcy Review reported. The board, which met in Milan to review the EUR3.4 billion takeover bid for the remaining 71% of Parmalat, said its members voted unanimously against it.

Italy's market watchdog Consob is to speed up its examination of the offer prospectus filed by French dairy group Lactalis for Italian rival Parmalat, Consob's head said in an newspaper interview on Sunday, Reuters reported. "We will examine it (the prospectus) rapidly, even before the legal timeframe limit," Giuseppe Vegas was quoted as saying in La Stampa. Under Italian law Consob has 15 days to look at a takeover offer but can ask for more time if it needs further information. Lactalis filed documents with Consob on Friday.

After making a fuss about defending Italian champions of industry, it turns out that the Italian government is willing to compromise, Dow Jones Daily Bankruptcy Review reported. When France's Groupe Lactalis SA first appeared on the scene in March, building up a 29% stake in dairy group Parmalat SpA, the government sounded the alarm amid fears that yet another Italian company would fall prey to a French predator. With Lactalis' move on Parmalat, the government went into action. It called on the country's bankers and industrialists to save Parmalat and passed measures to help them do so.

A Milan court on Monday acquitted four international banks and six managers on criminal charges related to the 2003 collapse of the Parmalat dairy empire, the Associated Press reported. The banks all immediately issued statements expressing satisfaction with the ruling, which brings to an end the 2-year-old trial, one of a series seeking to assign blame in the stunning corporate failure that still ranks as Europe's largest. Parmalat collapsed under the weight of its euro14 billion mountain of debt.

Linklaters has filed negligence claims against Italian law firm Gianni Origoni Grippo & Partners relating to advice given by the magic circle firm to Credit Suisse on a deal with Italian food company Parmalat nearly 10 years ago, LegalWeek.com reported. The claims, which were filed in the Admiralty and Commercial division of the High Court earlier this month (10 March), see Linklaters suing the Italian independent law firm as well as launching five claims against individuals.

Italian directory company Seat Pagine Gialle SpA bonds dropped Wednesday after the company published its full-year results and announced it intends to hire advisers for a process of "stabilization of its financial structure," Dow Jones Daily Bankruptcy Review reported. Seat Pagine Gialle posted a EUR667.4 million net loss in 2010 compared with a EUR38 million net loss a year earlier. The company made a goodwill writedown of EUR673.8 million following an impairment test. The Italian yellow pages publisher is shifting its focus to the online business from the declining print directories market.