ROME - 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-color humor and diplomatic gaffes.

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

Corrado Passera, chief executive of Italy's biggest retail bank Intesa Sanpaolo, was given the infrastructure and industry portfolio.