LONDON (Reuters) – Italian bond yields ticked higher on Tuesday, closing in on unsustainable levels as lawmakers in Rome readied for a crucial vote on public finances that marks the latest chapter in the euro zone debt crisis.

The euro slipped against the dollar but European shares rose on upbeat company earnings.

Investors shifted their attention from Greece — where attempts were still under way to form a consensus government to keep the country in the euro zone — to Italy, where Prime Minister Silvio Berlusconi is under intense pressure to resign.

Ten-year Italian bonds were yielding more than 6.7 percent, closing in on the 7 percent level that prompted Ireland and Portugal to seek bailouts.

Deep political divisions over the euro zone third-largest economy have spooked investors.

Barclays said in a note that current yield levels were “clearly unsustainable.” But it added that even if Italy enacts its planned budget reforms they may not be enough to stabilize financial markets.

“Historical experience suggests that the self-reinforcing negative market dynamics that now threaten Italy are very difficult to break,” it said in a note. “At this point, Italy may be beyond the point of no return.”

LONDON (Reuters) – Italian bond yields ticked higher on Tuesday, closing in on unsustainable levels as lawmakers in Rome readied for a crucial vote on public finances that marks the latest chapter in the euro zone debt crisis.

The euro slipped against the dollar but European shares rose on upbeat company earnings.

Investors shifted their attention from Greece — where attempts were still under way to form a consensus government to keep the country in the euro zone — to Italy, where Prime Minister Silvio Berlusconi is under intense pressure to resign.

Ten-year Italian bonds were yielding more than 6.7 percent, closing in on the 7 percent level that prompted Ireland and Portugal to seek bailouts.

Deep political divisions over the euro zone third-largest economy have spooked investors.

Barclays said in a note that current yield levels were “clearly unsustainable.” But it added that even if Italy enacts its planned budget reforms they may not be enough to stabilise financial markets.

“Historical experience suggests that the self-reinforcing negative market dynamics that now threaten Italy are very difficult to break,” it said in a note. “At this point, Italy may be beyond the point of no return.”