Show of unity steadies lira

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ROME (Reuter) - The battered Italian lira held steady in edgy trading yesterday after Prime Minister Silvio Berlusconi's show of coalition unity over the weekend, which was aimed at calming nervous financial markets.

But in a sign that the media tycoon's honeymoon with the electorate may be over, a poll showed 55.1 per cent of Italians were dissatisfied with his government's performance.

The embattled Mr Berlusconi, who made up with Northern League leader Umberto Bossi - his most troublesome coalition partner - at the weekend, repeated that there was no alternative to his conservative administration.

The lira, which fell to record lows on Friday due to worries about the domestic political outlook, was little changed in trading in London, but dealers and financial analysts said they remained wary about the future.

''The fact that they appear to have patched up their differences is fine,' said Clayton Perry, an analyst for merchant bank Credit Suisse First Boston.

'But the problems run deeper than can be solved in a single meeting and the markets are remaining on edge.'

In a move some commentators dubbed 'spaghetti diplomacy', Mr Bossi and Mr Berlusconi ironed out their differences in a meeting in the small hours of Saturday, which ended with the two men eating a plate of pasta at 5am.

Their arms draped around each other's shoulders, Mr Berlusconi and Mr Bossi pledged their commitment to stable government.