Prime Minister Silvio Berlusconi faced fresh calls to resign as markets turned on Italy, pushing its borrowing costs to dangerous new levels on renewed concern about a worsening of the euro zone crisis.
One of Italy's most prominent businessmen, Luca Cordero di Montezemolo, chairman of sports car maker Ferrari, said in a letter to the daily La Repubblica that Italy had reached "the point of no return" and urged Berlusconi to make way for a government of national unity.
Yields on Italy's 10-year, fixed-rate bonds known as BTPs rose to 6.1%, a level widely seen as unsustainable in the longer term and close to the level which forced Rome to seek help from the European Central Bank in August.
The ECB kept up its intervention to cap Rome's borrowing costs by buying Italian bonds on the market on Monday but the risk premium continued to rise and 10-year Italian yields ended the day more than 407 basis points above benchmark German Bunds.
The jump in the yield reflected widening market scepticism about measures EU leaders agreed last week to stem the euro zone crisis and underlined Italy's position at the centre of an emergency which threatens the entire bloc.
Italian bank leaders said tensions on sovereign bond markets risked raising bank lending costs and hitting companies already complaining about the difficulty in raising cash for investment.
Ferrari's Montezemolo said in his letter "There is not a minute to lose. The savings of Italian people, social cohesion and Italy's membership of the euro are all at risk."
"We do not have time to wait for the natural evolution of the political situation," he said. "The prime minister has to realise that the only way to save the country is through a government of public safety."
The sluggish Italian economy, weighed down by a public debt equivalent to 120% of gross domestic product, faces a growing risk of recession next year, which could derail the government aim of balancing the budget by 2013.
The government faces growing headwinds with attacks from establishment figures like Montezemolo and the Catholic Church and simmering tension at street protests, underlined by the violence seen at a demonstration in Rome on 15 October.
