Italy's Prime Minister Mario Monti
Prime Minister Mario Monti's success in winning an agreement from European partners to help contain Italy's borrowing costs may also help relieve the rising political pressure he has faced from fractious parties at home, reports Reuters.
Following increasing speculation about the possibility of early elections in the autumn, Monti left for Brussels with dark warnings from parties which support his technocrat government in parliament that he had to bring home a deal.
After promising that he would keep negotiations running into Sunday evening if necessary, Monti pressed German Chancellor Angela Merkel into dropping objections against the use of European bailout funds to stabilise bond markets.
Although important details of the agreement remain to be clarified, the immediate political reaction to the unexpectedly swift deal was positive.
"It was a decisive summit and it was necessary to get results and he got the results," Enrico Letta, deputy leader of the centre-left Democratic Party (PD) and a staunch Monti supporter, told Reuters.
"I think it demonstrated as well that the only one in Europe who can convince Angela Merkel is Mario Monti."
Nicknamed "The Italian Prussian" during his time as a highly regarded EU commissioner, Monti became prime minister in November promising to restore international credibility lost during Silvio Berlusconi's last year as prime minister.
There was a somewhat less enthusiastic reaction from the centre-right People of Freedom (PDL), Berlusconi's former party, which has been sharply critical of Monti's government. But it too appeared broadly satisfied.
"In the first instance, we can say that Monti seems to have obtained some significant results although it is not yet possible to say what real turnaround there may be in terms of the development of spreads and growth," said Fabrizio Cicchito, the party's parliamentary floor leader, in a statement.
Monti had benefited from the "generous support" given by the PDL," Cicchito said.
Market reaction to the deal was more muted, with yields on Italy's benchmark 10 year bonds still near 6 percent, a level widely considered unsustainable in the long term. The risk premium or spread over benchmark German Bunds was around 432 basis points, down around 40 points from Thursday's close.
Whether markets will relieve the pressure on Italy, which has a 1.9 trillion euro debt pile and has to sell almost 200 billion euros worth of bonds by the end of the year, is unclear.
But the immediate threat of a political crisis appears to have receded at least for the moment and Monti appeared sure enough of his position to announce that he would attend the final of the European football championship between Italy and Spain on Sunday.
At the same time as he was hammering out the deal in Brussels, the Italian team was defeating Germany in the semi final, thanks to two goals by striker Mario Balotelli which prompted much media talk of the two "Super Marios".
President Giorgio Napolitano had expressed concern ahead of the summit at the increasingly open political tensions in Rome against a backdrop of steadily eroding support for Monti.