Monti, 68, and his Cabinet took the oath in Rome from President Giorgio Napolitano, who reached outside the political arena to offer Monti the job after the resignation of Prime Minister Silvio Berlusconi on Nov 12. Monti’s ministers include Corrado Passera, chief executive officer of Intesa Sanpaolo SpA, the new industry minister and Antonio Catricala, head of the antitrust regulator, who will serve as deputy premier.

“We have received a lot of encouragement from our European partners and international authorities,” Monti said at a press conference in Rome this morning when he presented his government to Napolitano “I hope this translates into a calming of the markets, especially regarding the tensions facing our country.”

Italian bond yields remain near the 7 percent threshold that led Greece, Portugal and Ireland to seek bailouts, piling pressure on Monti to quickly spell out how he plans to cut the world’s fourth-biggest debt. He may be hamstrung by the refusal of the main parties to accept Cabinet positions, leaving Monti’s team of “technocrats” with no political base in parliament to pass legislation.

Confidence Votes

Monti will present the program for his government in Senate tomorrow at 1 p.m. A debate will follow before a confidence vote beginning at 8:30 p.m. A second confidence vote will follow in the Chamber of Deputies on Nov. 18 to formally confirm the new government.

His swearing in ended a tumultuous week that saw Silvio Berlusconi’s majority evaporate on Nov. 8, prompting his offer to resign once the legislature passed economic-growth legislation pledged to the European Union. After both houses endorsed the plan, Berlusconi stepped down on Nov. 12. Napolitano then held talks with all parties before reaching out to Monti, a former European Union competition commissioner.

In two days of talks, Monti failed to persuade the biggest parties to join the Cabinet, leaving them free to oppose his policies.

‘Technical Character’

Democratic Party leader Pier Luigi Bersani said he supported a government with “a strong technical character.” Angelino Alfano, head of Berlusconi’s People of Liberty party, said implementing austerity measures “represents the cornerstone” of their support for Monti. The incoming premier downplayed the rebuff.

“The lack of presence of political personalities in the government will help rather than obstruct the action of the government because it will remove any possible embarrassment,” he said.

Italian bonds gained, with the 10-year yield declining 7 basis points to 7 percent at 5:30 p.m. in Rome. That cut the difference with German bunds by 11 basis points to 518 basis points, sill more than twice the average for the past year.

With a debt of 1.9 trillion euros, more than Spain, Greece, Portugal and Ireland combined, the jump in bond yields is already raising borrowing costs in a country that needs to sell 440 billion euros ($594 billion) of debt next year. The Treasury had to offer a yield of 6.29 percent, the highest since 1997, on five-year bonds at an auction on Nov. 14.

‘Harsh Measures’

Monti “has all the necessary qualities not to mention his credibility and reputation in Europe and the world, but it’s not sufficient,” said Phil Giurlando, a researcher in political science at Queen’s University in Ontario, Canada. “He will have to convince all these groups that are protecting their electoral fortunes that these sacrifices have to be made.”

Mustering political backing may be vital to Monti’s success should Italians turn against austerity. The government may be forced to sell assets, introduce property and wealth taxes and cut spending on health care, pensions and education, said Nicola Marinelli, who oversees $153 million at Glendevon King Asset Management in London.

“When all this is clear to the wider public, I think that the public backlash would be such that the parties that are backing him today, in a lukewarm and forced way, will change course quicker than Lady Gaga changes dresses,” Marinelli said.

Monti included unions and employers in his talks and he said they understood that sacrifices would be necessary.

Primary Surplus

Italy’s deficit, at 4.6 percent of gross domestic product last year, is about the same as Germany’s, lower than that of France and less than half the U.K.’s, at 10.3 percent.

The country, which has a primary surplus, could send the debt on a declining trajectory starting next year. Still, anemic economic growth and the Berlusconi’s government struggle to shore up public finances led investors to bet against Italy.

Monti, an economist who is president of Bocconi University in Milan, the country’s top business school, also needs to persuade the European Central Bank to continue to backstop the country’s debt.

The ECB began buying Italian debt on Aug. 8 after the nation unveiled 45.5 billion euros in austerity measures, though the effort hasn’t been sufficient to stem borrowing costs. The ECB bought almost half as many bonds last week as it did in the previous week.

The EU has signaled it wants additional action by Italy to spur growth and trim debt as well as hasten implementation of measures it has already passed. They include increasing the retirement age, opening up closed professions and selling real- estate assets. EU and ECB inspectors arrived in Italy last week and Berlusconi also agreed to have Italy’s finances monitored by the International Monetary Fund.