Financial markets have reacted nervously to the uncertain political outlook facing Italy after the election and in particular to the return of Silvio Berlusconi as the candidate of the center-right People of Freedom (PDL) party.

Berlusconi criticised Monti's technocrat government today, accusing it of accepting severe economic austerity policies dictated by Germany which had dragged Italy into recession.

Monti said yesterday he was concentrating on his remaining time in government and not thinking about whether to stand as a candidate.

Speaking on state television RAI, Monti defended his government's economic record and warned against populism and "oversimplified" election promises that hid the true problems facing Italy and he again left his political plans open.

"Politics is above all a question of culture, that is, trying to give direction to people's ideas," he told state television RAI.