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Italy is the eurozone's third-largest economy and it might be too big to rescue.Italy's borrowing costs have risen to euro-era highs, placing pressure on Prime Minister Silvio Berlusconi to resign. The yield on Italy's 10-year bonds jumped Monday to 6.67%, drawing close to the 7% threshold that forced both Ireland and Portugal to accept bailouts, according to The Associated Press. At one point Tuesday, the yield spiked to 6.74%, its highest level since the creation of the euro in 1999, AP said.Berlusconi has promised to push overhauls necessary to reignite Italy's economy, but a routine budget vote in Parliament on Tuesday could turn the heat up on the prime minister. If the vote fails, Berlusconi could face a confidence vote.On Tuesday, Berlusconi's main coalition ally, Northern League leader Umberto Bossi, urged the prime minister to step aside."We asked him to step aside, take a step to the side," Bossi told reporters as he arrived ahead of the budget vote.Asian shares closed mostly lower Tuesday, with Japan's Nikkei 225 index falling 1.3%. Stock futures in the U.S. were signaling a slightly higher opening on Tuesday. Gold prices were flirting with $1,800 an ounce Tuesday as a weaker U.S. dollar and safe-haven buying supported the metal. The popular gold exchange-raded fund SPDR Gold Shares(GLD) added 10 tons Monday as investors moved into gold. Not only are investors worried about the fate of Greece as the country struggles to name an interim prime minister, and the fate of Italy with leader Berlusconi trying to hold on to power, but possible inflation as well. The European Central Bank bought €9.5 billion worth of government bonds last week and still Italy's cost of borrowing soared to more than 6.6%. "This gives reason to fear that the ECB will have to expand its bond buying considerably in the coming months," said Commerzbank especially as disagreements remain about how to boost the firepower of the European Financial Stability Fund. Although inflation in the eurozone is at 3% and ECB President Mario Draghi said prices should fall below the 2% mandated level during 2012, more money in the system leaves investors skeptical of paper money, which leaves gold as a popular hedge. Wall Street bonuses are set to shrink by an average of 20% to 30% from last year, with even steeper declines for bond traders, The Wall Street Journal reported, citing a report to be released Tuesday by Johnson Associates Inc."This year started with great promise for a banner year on Wall Street, but hopes for larger bonuses faded over the summer and continue to dim as we approach year-end," said Alan Johnson, Johnson Associates' managing director.Lower bonuses will be widespread, with the average managing director taking home about $900,000, down from about $1.2 million in 2010, the survey said. The figures don't include employee salaries. Bonuses on Wall Street usually account for a high percentage of overall compensation. A federal judge approved a $410 million settlement of a class-action lawsuit accusing Bank of America (BAC) of overcharging 13.2 million customers for debit card overdrafts, according to AP. Senior U.S District Judge James Lawrence King approved the settlement, under which the affected customers who had debit cards with Bank of America between January 2001 and May 2011 would get automatic credits to their checking accounts, or checks mailed to them, if they no longer had checking accounts with the bank. Targacept(TRGT) and AstraZeneca (AZN) announced the failure of the experimental pill TC-5214 in a phase III clinical trial in depression. Both stocks will be down Tuesday, but expect Targacept's market value to be cut in half if not more on the negative study results. Expect volatility in shares of Amylin Pharmaceuticals (AMLN) following the announcement Tuesday that the company has ended a partnership with Eli Lilly (LLY) to market the diabetes drugs Byetta and Bydureon. In election news, Mississippi Republican Lieutenant Gov. Phil Bryant is widely expected to win the gubernatorial race on Tuesday. Outgoing Gov. Haley Barbour, a Republican has endorsed Bryant.Barbour also has given his support to an amendment to the state constitution that would define life as beginning at the moment of conception.If the amendment on "personhood" passes, it would be impossible to get an abortion and make it more difficult to obtain certain forms of birth control.In Kentucky, Gov. Steve Beshear, a Democrat, is the favorite to win a second term.-- Written by Joseph Woelfel>To submit a news tip, send an email to: tips@thestreet.com.
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