EUROPEAN COUNCIL PRESIDENT Herman van Rompuy has called a meeting of senior figures in the EU and Eurozone, as the Eurozone debt crisis threatens to force Italy into needing an enormous EU-IMF bailout.

Van Rompuy will hold high-level talks with European Commission president Jose Manuel Barroso, ECB chief Jean-Claude Trichet and Eurozone leader Jean-Claude Juncker as markets speculate on whether Italy could be next to need a major European bailout.

Italian 10-year bonds this morning breached the 5.4 per cent barrier, stretching their spread over the benchmark German bond to a new record in the lifetime of the Euro.

While that interest rate is still far lower than the point at which Greece, Ireland and Portugal were forced to seek foreign assistance, the sheer volume of an Italian bailout means a relatively moderate spike in borrowing costs could be enough to send Italy over the edge.

If Italy were to be frozen out of money markets, its need for alternative funding would be massive: its economy is more than twice the size of the Irish, Greek and Portuguese economies combined.

The New York Times has discussed the role of Italy’s domestic political climate in its economic turmoil, with relationships between Silvio Berlusconi and his finance minister Giulio Tremonti being particularly icy of late.

Bloomberg reported that European stock markets fell this morning on the new speculation, with Italian bank shares sliding significantly.