*** The Italian political situation...........>

ITALY: *** The Italian political situation developed over the weekend as

President Mattarella wouldn't allow the Eurosceptic Savona to assume the role of

economy minister, owing to his anti-Euro views. This forced PM-designate Conte

to declare that he has failed to assume a government. Since then 5SM have been

discussing the impeachment of Mattarella, although such a motion would require

support from the League who have remained quiet on the matter. Mattarella is set

to meet with former IMF official Carlo Cottarelli on Monday and has noted that

he will wait before deciding on the calling of new elections. This all comes

after ratings agency Moody's placed Italy's Baa2 rating on review for downgrade

on Friday citing the significant risk of a material weakening in Italy's fiscal

strength, given the fiscal plans of the new coalition government and the risk

that the structural reform effort stalls & past reforms are reversed. Italy is

seemingly destined to return to the voting booths, and the country's Eurozone

membership may be more front and centre in the debates this time out.