OTTAWA (Reuters) - Canada praised the Italian government's austerity plans on Tuesday while calling on Europe to come up with a continent-wide solution to its debt problems.
Financial markets, increasingly worried about Italy's debt sustainability, drove Italian bond yields to an 11-year high on Tuesday and prompted authorities to call emergency talks.
Last month the Italian government passed a 48 billion euro ($68.3 billion) package of austerity measures aimed at helping to bring the budget into balance by 2014.
"The steps that have been taken by the government of Italy, by Finance Minister (Giulio) Tremonti, to create some government austerity in Italy, and I think that that is moving in the right direction," Flaherty told reporters in Mississauga, Ontario, near Toronto.
"Our concern in Europe -- and we've encouraged the Europeans to act in this direction -- is to create a European solution to these issues, that if one addresses these issues country by country it's difficult to get ahead of the potential crisis," he said in televised remarks
Flaherty declined to comment on a U.S. political deal to cut the budget deficit, saying he had not seen all the details and noting that a final vote on the debt ceiling agreement had not yet taken place.
Reporting by David Ljunggren; editing by Rob Wilson