Mario Monti formed a new technocrat government in Italy on Wednesday to tackle a major debt crisis threatening the entire euro zone and said he hoped it would placate financial markets.

President Giorgio Napolitano swore in a 16-member government, including three women, at his palace on Wednesday afternoon, ending a chaotic political crisis that has placed Italy at the centre of the euro zone's burgeoning problems.

The government now has the urgent task of tackling a broader crisis that has pushed Italy's borrowing costs to untenable levels and brought it to the brink of economic disaster.

Speaking after presenting his cabinet to the president earlier, Monti said: "We feel sure of what we have done and we have received many signals of encouragement from our European partners and the international world.

"All this will, I trust, translate into a calming of that part of the market difficulty which concerns our country."

The appointment of the widely respected former European Commissioner to replace flamboyant media magnate Silvio Berlusconi has brought relief in euro zone capitals.

Germany Chancellor Angela Merkel values Monti very highly, her spokesman said in Berlin, adding that she was ready to meet him. Many world leaders in contrast tried to keep clear of Berlusconi, notorious for off-colour humour and diplomatic gaffes.

Monti, a respected economics professor and former European commissioner, said he would take the crucial economy portfolio himself.

After disputes among political parties which complicated Monti's task, the new government contained no politicians, as he was reported in the media to have wanted.

Some analysts say this could make it more vulnerable to ambushes in parliament as it pushes through unpopular measures.

But Monti said it would strengthen the government by enabling it to avoid political disputes and press ahead with vital reforms.