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News Wrap: Berlusconi Pledges to Accelerate Italian Austerity Measures

July 12, 2011 at 12:00 AM EDT

HARI SREENIVASAN: Wall Street struggled again today, as debt worries in Europe weighed on investors. The Dow Jones industrial average lost nearly 59 points to close below 12,447. The Nasdaq fell more than 20 points to close under 2,782.

European leaders and markets also faced a gathering storm of worries over Italy and its financial condition. In a bid to restore calm, Prime Minister Silvio Berlusconi vowed to accelerate adoption of austerity measures to balance his country’s budget.

We have a report narrated by Faisal Islam of Independent Television News.

FAISAL ISLAM: A procession of Europe’s financial ministers attend another fraught meeting in Brussels, as the financial markets slump and ratchet up the cost of borrowing for yet another highly indebted Mediterranean country, except, this time, it’s for real, not a tiny peripheral economy, but Italy, the world’s eighth biggest economy.

In Rome, no sense of a Greek-style crises just yet. However, this, the city where European economic integration began with the 1957 treaty, could yet be the site of its ultimate failure. Investors somewhat spooked by the ability of Italy’s fractious politics to drive through a package of spending cuts and tax rises, particularly after a public spat between Italian Prime Minister Silvio Berlusconi and his own finance minister.

OLIVER ROTH, Close Brothers Seydler Bank: Of course the markets are reacting, because they were nervous before. And now they’re getting much more nervous because of such — such talks about Italy.

FAISAL ISLAM: The Eurozone’s current bailout funds simply could not afford to prop up Italy. Italy has a massive national debt worth more than the size of its stagnant economy. Today’s meeting was actually meant to finally sort out Greece. Europe is inching towards accepting a form of Greek debt default, according to one minister here — the problem, that it would set a precedent for the likes of Italy and Spain.

OLLI REHN, European commissioner for economic affairs: The current state of the crises is a severely intertwined combination of the sovereign debt crises and banking sector (INAUDIBLE) and we cannot solve one without solving the other. We need to solve both.

FAISAL ISLAM: Simply put, if Italy can’t put a lid on this and can’t tap international markets for funds, either the Eurozone will break up or Europe will need to turn into a fully-fledged political union. This euro crisis may only just be getting going.

HARI SREENIVASAN: In another development late today, the Moody’s bond rating service downgraded Irish government bonds to junk status.

The death toll rose to 88 today in the sinking of a Russian tourist boat on Sunday. More than 40 others were still missing at the scene of the disaster on the Volga River 450 miles east of Moscow. Russian President Dmitry Medvedev warned there would be harsh punishment for anyone found guilty of negligence in the sinking.

In Pakistan, intelligence officials reported U.S. drone aircraft firing missiles killed at least 42 suspected militants in less than 24 hours. Four missile strikes targeted sites in tribal areas near the Afghan border beginning late Monday night. U.S. and Pakistani relations have been increasingly tense since the raid that killed Osama bin Laden.

A U.S. Army Ranger was awarded the nation’s highest military award, the Medal of Honor, today for heroism in Afghanistan. During a fight in 2008, Sgt. 1st Class Leroy Petry was shot in both legs and lost his right hand when he tried to throw back an enemy grenade. His actions saved two other Rangers.

President Obama presented the medal at a White House ceremony this afternoon. Later, outside the White House, Petry said all of the troops serving overseas are heroes.

SGT. 1ST CLASS LEROY PETRY: I ask, whatever — whenever you have a chance or opportunity to thank them, shake their hand, give them a pat on the back for the job they have done, because they have earned it. That’s the greatest reward any service member can get, is just a simple thank you.

HARI SREENIVASAN: Petry is the 149th recipient of the Medal of Honor, and he is only the second living service member to receive one for service in Iraq or Afghanistan.

Those are some of the day’s major stories.