Conservative party leader Silvio Berlusconi on Tuesday ruled out fresh Italian elections and hinted at a German-style "grand coalition" with the centre-left after a general election denied any coalition a governing majority in the Senate.
Asked on one of his television channels whether a new election should be held, the media mogul said: "I don't think it would be useful in this situation."
According to final results, the centre-left squeaked a victory in the Chamber of Deputies, the lower house of parliament, with 29.5 per cent against 29.1 per cent for Berlusconi's conservatives. This gives the centre-left a comfortable majority of 340 seats, thanks to an electoral bonus granted to the winner.
But no coalition has a clear majority in the Senate, where seats are allocated on a regional, rather than national, basis. The centre-left has the most seats - 120 - in the 315-strong chamber.
Asked how he would proceed, Berlusconi did not rule out an alliance between his People of Freedom party and Pier Luigi Bersani's Democratic Party, the biggest party on the left.
"Everyone should now reflect on what can be useful for Italy. It will take time," Berlusconi said, adding that Italy could not be left without a government.
With most Italian newspapers using front-page headlines bearing the word "ungovernable," one Democratic Party official, Francesco Boccia, said a "transparent" deal with Berlusconi might have to be reached on "certain issues," including, possibly, a new electoral law.
The Milan stock exchange plunged - down 5 per cent at one point - during early morning trading on the news that the eurozone's third-largest economy might not have a new government soon, while the risk differential between Italian and German 10-year government bonds shot up to 342 points.
According to the influential daily Corriere della Sera, the only realistic options facing Italy were a grand coalition or new elections, but only after a new president is elected. Giorgio Napolitano, who was due to visit Munich later on Tuesday, will see his term expire in May.
Monday's election result was largely a consequence of the success of parties opposed to European Union-backed austerity policies, with the radical protest Five Star Movement (M5S) of comedian Beppe Grillo coming from nowhere to score 25.5 per cent.
The M5S could play the role of kingmaker, but has excluded any alliance with the country's traditional parties, which it accuses of being corrupt and out of touch with the people.
The inconclusive result was also due to a better-than-expected performance from Berlusconi, who ran a populist, anti-European campaign in which he promised to refund taxes and ignore financial market reactions to the country's debt problems.
The centrist grouping of outgoing premier Mario Monti ended up a poor fourth, with 10.6 per cent. Monti, who raised taxes and introduced unpopular labour and pension reforms in the name of saving Italy from default, was the most pro-EU candidate.