The imminent end of Prime Minister Mario Monti's governmentfueled the largest increase in Italian borrowing costs in fourmonths and threatened to open a new front in Europe's crisis fightbefore a year-end summit.

Italian 10-year bond yields jumped 36 basis points to 4.89percent at 12:18 p.m. in Rome, widening the difference betweenyields on German bunds of similar maturity by 38 basis points to361 basis points. Italy's benchmark FTSE MIB stock index fell 3.4percent, while Germany's DAX Index slipped 0.6 percent.

Italy's government crisis, which pits Monti against billionaireformer premier Silvio Berlusconi, is roiling investors and bringingtensions among European Union leaders to the fore. EU heads ofstate and government, gathering in Oslo today to collect the NobelPeace Prize, are seeking to present a united front as the resurgentBerlusconi hits the campaign trail with his German-skeptic,anti-austerity message.