Greece debt crisis: Italy fears contagion as Milan stock exchange drops 5 per cent

But Italy's Finance Minister said that even in the event of Greece’s exit from the euro, Italy would be better protected this time from speculators

Pier Carlo Padoan said the ECB had financial ‘tools’ to combat speculators (EPA)

As panic returned to the markets along with the C-word – contagion – Italian commentators feared a return to the bad days of late 2011, when Italy appeared itself to be heading for a financial cliff. By the afternoon on 29 June, Milan’s stock exchange was down almost 5 per cent and government borrowing costs surged.

But Finance Minister Pier Carlo Padoan said that even in the event of Greece’s exit from the euro, Italy would be better protected this time from speculators. The European Central Bank would use all the fire power needed to prevent another sovereign debt crisis, he told Corriere Della Sera. He said Italy was protected by financial “tools” that include ECB’s quantitative easing.

“Speculation would not affect us: if there is an attack, the ECB has tools,” he said. “We are not in 2011, today our institutions are firmer, as is our economy.”

Italy’s official line is that Greece should stay in the single currency. Seeking to down-play growing acrimony, Prime Minister Matteo Renzi said the decision for Greeks in the referendum was straightforward. It would not be a case of choosing between the European Commission and Mr Tsipras, but a contest of “euro vs drachma”, he said on Twitter.