Italian stocks have dropped more than three percent amid increasing fears over an anticipated bailout of the crisis-hit Spain.
On Wednesday, the main FTSE Mib index in Milan fell below 3.0 percent as the Bank of Spain announced that the debt-wrecked country’s economic output is shrinking at a “significant pace” in the third quarter of 2012.
The worsening eurozone debt crisis has increased Spain’s financing costs and the country is seeking a European Union bailout similar to the one Greece received.
However, Italy is not seeking help from the European Union bailout fund or the European Central Bank, despite the worsening economy and public finances.
"At this point, it is not within any plan of the Italian government to apply for any programme. We are quite confident we are solving Italian problems within our government mandate," Italy’s Economy and Finance Minister Vittorio Grilli said.
The continued recession is gloomy news for Italians, who have seen a series of austerity packages, tax hikes and pension charges.
The worsening debt crisis has forced the EU governments to adopt harsh austerity measures and tough economic reforms, which have triggered incidents of social unrest and massive protests in many European countries.