Italian leftist leader Pier Luigi Bersani has lost his bid to form a new government after failing to break a political deadlock, leaving the eurozone's third largest economy in limbo.
The ex-Communist had been given a mandate last week by Italy's president to try to muster enough support to govern after inconclusive elections that left the country vulnerable on financial markets.
After six days of intense and often bitter consultations with rival parties, Bersani reported to President Giorgio Napolitano that he had failed to gather the parliamentary backing needed to rule.
"My work in these days has not led to a positive result," Bersani said after talks with Napolitano on Thursday.
The Democratic Party (PD) said their leader had not given up on forming a government, but observers said Napolitano could now move to choose a different figure to lead Italy.
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Napolitano "will take immediate initiatives that will allow him to ascertain personally the possible developments", said Donato Marra, the secretary general of the presidency.
The president is set to begin a new round of consultations with political parties on Friday.
Napolitano could hand over the reins to a technocrat government similar to the one headed up by outgoing Prime Minister Mario Monti, who was brought in to rescue Italy from the debt crisis in 2011.
Bersani's failure to muster support returns Italy to square one, after elections in February saw the centre-left scrape a victory in the lower house but fail to win a key majority in the upper house.
Napolitano had made it clear that Bersani would have to come up with firm guarantees of support from the other parties in order to win a full mandate to form a government.
The political turmoil in Italy has been watched closely by Europe and the markets, which fear instability in the debt-laden country could spark tumult in the eurozone, particularly after a bailout dispute in Cyprus reignited fears over the euro area debt crisis.
