Berlusconi backs Italy's coalition government after court upholds his conviction for tax fraud

FXstreet.com (Barcelona) - Silvio Berlusconi's conviction for tax fraud last week and the political instability it had resulted in, has been causing growing worries about the durability of the country´s nascent economic recovery.

The four-year jail sentence (reduced to one year) and the five-year ban on holding public offices (still to be reviewed) for 'Il Cavaliere' angered his supporters who took to the streets demanding his acquittal.

On Sunday Silvio Berlusconi appeared before the protesting crowds in Rome, reiterating that he is innocent but at the same time expressing his support for Enrico Letta's "grand coalition" government made up of the center-left Democratic Party and Berlusconi's center-right People of Freedom party.

"We have said loud and clear that the government must go forward to approve the economic measures that we asked for and were agreed," Berlusconi said. "What drives us is not our personal interests. Always the interests of everyone and of our Italy come first."

This move reassured the markets somewhat and after the Italian services PMI numbers came in better than expected on Monday morning, Italian yields fell to the lowest since mid-June.