Markets rally as Italy approves austerity package

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European markets rallied late on Friday as Italy approved new austerity measures, a move which is set to precede the resignation of Prime Minister Silvio Berlusconi.

London's FTSE closed more than 100 points higher at 5,545 while major indices in Germany and France also rallied. In New York, the Dow Jones gained almost 270 points, or 2.24%, to 12,160 shortly after opening. The austerity package outlines plans to make almost €60bn savings from a mixture of tax rises and spending cuts. Berlusconi had promised to resign once the measures had been passed, with his successor tipped to be former EU commissioner Mario Monti. It follows a tumultuous week for Europe's third-largest economy, which saw its ten-year bond yields top the key 7% level on W...

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