Italy on the brink: Bonds and shares dive after Berlusconi orders five ministers to quit plunging government into chaos Former premier's orders have left Italy without a functioning government Shares in broadcaster Mediaset, controlled by Berlusconi, down nearly 5% Country could face elections creating more long term political uncertainty By Hannah Roberts In Rome Italy is on the verge of political meltdown, with a breakaway faction in Silvio Berlusconi's party providing the only hope for the government's survival. The billionaire sparked chaos at the weekend when he ordered his ministers to resign from a coalition with the centre left, leaving the government close to collapse. The threat of fresh elections, and months more turmoil, in the Eurozone's third largest economy, has already scared investors, with warnings that Italy's BBB+ credit rating is at risk of downgrade. Former premier Silvio Berlusconi has left Italy without a functioning government after ordering members to quit, causing bonds and shares to dive. Berlusconi, pictured last week arriving at his private residence, in Rome, faces eviction from parliament over tax fraud Berlusconi's centre right People of Liberty party has ruled in a uneasy coalition with the centre left since April. Prime Minister Enrico Letta faces a vote of confidence in the Parliament tomorrow. If all Berlusconi's MPs vote against him, the government's majority will collapse. But a rebel faction within People of Liberty may provide salvation for Letta, a party source has claimed. If the dissidents support the government a workable majority could be cobbled together, preventing the collapse of the administration. Rumours of the rebellion slightly revived prices of Italian stocks and bonds. The yields on Italy's 10-year bond, a good indicator of long-term sentiment towards Italy, spiked to 4.73 per cent early on Monday from 4.42 per cent on Friday, the highest since June but well below a 7.5 per cent yield hit when Italy came on the verge of default in late 2011. Shares in Milan's blue-chip FTSE MIB plunged 2.5 per cent minutes after opening, with banking stocks particularly heavy. Shares in broadcasting group Mediaset, controlled by Silvio Berlusconi, were down nearly 5 per cent. Italian Prime Minister Enrico Letta will go before parliament on Wednesday and hold a confidence vote to verify what is left of his parliamentary backing. The outcome of a confidence vote is uncertain as some of Berlusconi's lawmakers from his centre-right party have shown increasing unease over his shock decision to withdraw government support. Minister Gaetano Quagliarello told an Italian newspaper on Monday there was talk to form another centre-right party. Italy's bonds are at a three-day low, and shares in big companies have fallen. It's goverment could face elections, causing more political and market uncertainty. Pictured Italy's Upper house, in Rome 'The resignation of the centre-right ministers will clearly increase volatility in the government bond market, similar to what happened between February and April, before the current government was formed,' Goldman Sachs analysts said, adding the crisis threatened the few reforms Letta's coalition was trying to push through. Letta enjoys a commanding majority in the lower house but would need to win over a couple of dozen senators from Berlusconi's PDL party or opposition parties including the anti-establishment 5-Star Movement to be able to be sure of parliamentary support. 'Markets have grown accustomed to Italy's dysfunctional politics, but there's a sense that things are now spinning out of control,' said Nicholas Spiro, who runs specialised consultancy Spiro Sovereign Strategy.