Financial markets capped a turbulent week on a positive note as new leaders prepared to take over the governments of Greece and Italy. The two countries have been at the center of Europe's debt crisis. Financial experts say the leadership changes are just the first step toward advancing fiscal reforms needed to stop the crisis in some of the 17 countries that use the euro. But analysts say progress is far from certain.
After much uncertainty, world markets turned sharply higher on Friday. Oil prices rose above $98 a barrel and Italy's borrowing costs dropped below 6 percent.
Italian market analyst Gianmaria Bergantino says the collective sigh of relief from investors came after the Italian Senate approved tough new austerity measures.
"The reaction of the market is positive. Yesterday we see the market going up and also, this morning the market opened in a positive way," Befgantino said.
The measures include the sale of $20 billion of government property, and an increase in Italy's retirement age from 65 to 67 by 2026.
The reforms also pave the way for the expected resignation of Italian Prime Minister Silvio Berlusconi.
Mario Monti, the likely interim successor, is seen as a non-partisan technocrat, who will be able to rein in Italy's growing debt.
"Mario Monti would be just the first step for Italy, because he will make these stability rules and try to apply all the reforms that the European countries asked us," Bergantino said.
Similar changes are happening in Greece, where former central banker Lucas Papademos was sworn in as the interim prime minister. He takes over a divided government vacated by former Prime Minister George Papandreou.
Foreign policy analyst Thanos Dokos says Papademos has the popular support right now - but for how long?
"I think he will get that kind of brief honeymoon to try to do his job in a proper way. And of course, at some point they will be expecting some results, which I'm afraid will not be forthcoming in the short term," Dokos said.
Greece must pass a series of unpopular measures at a time of deep recession and high unemployment before it can secure its next bailout installment of $11 billion.
Italy, which is trying to avoid becoming the fourth eurozone country to need a bailout - is under intense pressure to reduce its public debt, estimated at $2.6 trillion - nearly six times larger than Greece's.
