EU's Rehn: Italy needs political stability for reforms, growth

PARIS (Reuters) - Italy must quickly restore political stability to make the reforms it needs to return to growth, the European Union's top economic official said on Tuesday.

Former prime minister Silvio Berlusconi's decision to order five ministers to resign has plunged Italy into political chaos and left the euro zone's third-largest economy without a fully operational government, prompting warnings that its sovereign debt rating is at risk.

"I want to express my strong hope that Italy will return to political stability as soon as possible, in order to be able to take the many important decisions that are needed for the sake of returning to growth and job creation," Olli Rehn said during a visit to Paris.

"There is a lot at stake for all European citizens now. ... the impact of what happens in Italy does not end at the country's borders. It is felt throughout Europe," Rehn said. "Italy's progress or lack of progress, its achievements or lack of achievements, are also Europe's."

Italian bonds rallied on Tuesday on signs the government will have sufficient support in a confidence vote to avoid a fresh round of tightly-contested elections.

A prominent center-right Italian senator said the majority of MPs in Silvio Berlusconi's party did not want to bring the government down, easing some of the tensions triggered by the resignation of five ministers at the weekend.

(Reporting by Ingrid Melander and Eva Taylor)