OECD seeks to calm fears over Italy turmoil

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Paris (AFP)

The OECD on Wednesday sought to calm concerns over political chaos in Italy that has sent global markets into a tailspin and raised the spectre of a fresh eurozone crisis.

"Italy is part of Europe and part of the euro, and it will remain so," Organisation for Economic Cooperation and Development's chief Angel Gurria told reporters at the body's annual meeting in Paris.

Gurria meanwhile urged Italy to stay the course on its economic reforms and its limits on borrowing and spending.

The secretary general's comments came a day after controversial remarks attributed to EU budget commissioner Guenther Oettinger, who reportedly suggested the financial markets would tell Italians how to vote.

European Commission chief Jean-Claude Juncker denied the remarks and said Italy -- a founding member of the EU and the euro -- would continue to pursue its EU path.

Speaking in Italian, Gurria said Wednesday: "We cannot do politics based on what happens on the markets one day."

"We are worried about instability and the markets reflect that," he added.

"If we changed policy every day, it would be madness," Gurria said, as he appealed to Italian institutions to maintain their fiscal policies.

The statement followed two days of tumult on the global markets that saw the Milan FTSE MIB stock exchange plummet three percent on Tuesday, only to settle back into the black in Wednesday trading.

Tensions remain as the possibility of snap elections leading to a populist government is gaining force.

Analysts fear that an anti-establishment, far-right alliance may win even more votes should Italians go back to the polls.

Caretaker prime minister Carlo Cottarelli, an economist formerly with the International Monetary Fund whose support for austerity measures earned him the nickname "Mr Scissors", met with President Sergio Mattarella for talks earlier Wednesday.

But he is unlikely to secure support from parliament when he proposes a government, raising the possibility of fresh elections as early as July.