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Markets shrug off Berlusconi sentence

Friday, August 02, 2013 - 02:01

August 2 - As Italians absorb news of former Italian Prime Minister Silvio Berlusconi's jail sentence, markets appear unfazed despite the fact the ruling coalition could now be thrown into further crisis. Kirsty Basset reports.

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Italians woke up to the news that three time Prime Minister of Italy, Silvio Berlusconi, had been sentenced to jail - after a court upheld a tax fraud conviction. Many were divided over the outcome. (SOUNDBITE) (Italian) ROME RESIDENT, STEFANO DE BRERI, SAYING: "In my opinion this is not the way a civilised country should treat people who have done a lot for the country. He may have made mistakes but I think the judiciary persecution against him was too violent." (SOUNDBITE) (Italian) ROME RESIDENT, NICOLETTA LA BANCA, SAYING: "I believe it was a just verdict because I don't think the judges would have sentenced somebody without tangible proof." The decision comes just three months after Prime Minister Enrico Letta formed an uneasy coalition with Berlusconi's People of Freedom party. Now that coalition's been thrust into uncertainty - once again. But Barclays' Will Hobbs says it's not unusual in Italian politics. (SOUNDBITE)(ENGLISH) HEAD OF EQUITY STRATEGY AT BARCLAYS, WILL HOBBS SAYING: "The political situation in Italy remains fragile. But don't forget the average life cycle of an average parliament in Italy since 1948 is little over 12 months. So political volatility is the norm not the exception in Italy - that seems to be the case right now." Ten year Italian government bond yields were slightly down, showing investors weren't rattled by the decision either. Citi's Valentin Marinov says the investment picture doesn't change - for now. (SOUNDBITE)(ENGLISH) HEAD OF G10 FX STRATEGY, CITI, VALENTIN MARINOV SAYING: "Investors are just focusing on the bigger picture. Fundamentals in Italy remain rather weak and the current government was very quick to delay important fiscal austerity reforms. So presumably there may be a day of reckoning to come at some point where investors will turn their backs on the BTP market but that is yet to come." The supreme court's ruling was the first definitive sentence for Berlusconi after dozens of trials ranging from tax to sex offences. But the 76 year old billionaire is unlikely to serve any jail time, because of his age.