Italian Markets Going Wild After Berlusconi's Allies Rebel Against Him

Italian newspaper Ansa reports that leaders of Silvio Berlusconi's PDL party say the party would likely support current prime minister Enrico Letta in a possible confidence vote tomorrow.

Italian deputy prime minister and PDL member Angelino Alfano said his party should vote in favor of Letta, and that there are no divisions within the party, according to Ansa.

PDL senator Carlo Govanardi said in a phone interview with Bloomberg that his "bias is to vote" for Letta, and that his fellow party members will also likely vote in favor of Letta.

Italian stocks and bonds are rallying as borrowing costs plummet.

The FTSE MIB is up 2.4%, while the yield on the 10-year Italian government bond is 4.46%, 10 basis points lower from yesterday's close.

Over the weekend, Berlusconi tried to force a collapse of Letta's fragile coalition government by announcing the resignation of several PDL ministers from Letta's cabinet.