The euro zone looks for some respite Wednesday, with Italy due to unveil a technocrat-led cabinet and a new Greek coalition expected to win a confidence vote, as Europe battles to prevent its debt woes from dragging down the world economy.

Former EU commissioner Mario Monti is set to inform Italy's president that he has assembled a new government, whose most pressing task will be to get a fractious political class to agree to painful structural reforms designed to rescue its debt-laden finances.

In Athens, new prime minister Lucas Papademos expects an easy win in a confidence vote, but rebuilding Greece's shattered finances will be a daunting task with his national unity government already split over new austerity measures.

With financial markets sceptical that unelected technocrats will have the political clout to impose unpopular reforms, the two-year debt crisis risks engulfing the entire currency bloc and hurting global growth.

Asian shares and the euro fell Wednesday as signs that rising borrowing costs were affecting AAA-rated France stirred fears that even core euro zone members may not escape contagion from the region's debt crisis.

MSCI's broadest index of Asia Pacific shares outside Japan fell 1.3 percent, while Japan's Nikkei stock average slipped 0.1 percent Wednesday.

The euro hit a five-week low and was down 0.6 percent against both the dollar and the yen, standing at $1.3453 and 103.66 yen respectively, as euro zone jitters spurred risk aversion moves.

Markets are clearly expecting a circuit breaker to alleviate pressure on periphery bond yields, said David Scutt, a trader at Arab Bank Australia in Sydney. If no announcement is forthcoming in the days ahead, one suspects that situation could unravel fairly quickly.

U.S. Treasury Secretary Timothy Geithner said Europe had a difficult task in boosting the creditworthiness of some of its economies while also boosting growth.

That's a difficult balance and you can see they're struggling with it but I think they're gradually making progress, he told a conference sponsored by the Wall Street Journal. This is absolutely within Europe's capacity to solve and it's within their ability.

France has become the latest euro zone member to come under pressure after a spike in its borrowing costs on jittery bond markets fuelled concerns that the euro zone's second biggest economy was also being sucked into the spiralling debt crisis.

With a Brussels-based think-tank warning that Paris's economy should be ringing alarm bells, Finance Minister Francois Baroin sought to calm fears about France's finances.

We have the necessary room to manoeuvre within the budget to meet our 2012 deficit target even if the economy slows more than expected, he said in an interview in Wednesday's edition of Les Echos. Even with growth of 0.5 percent we can cope.

Baroin said the government was not working on a third savings package after announcing a second round of belt-tightening in three months last week in order to keep its deficit targets within reach, despite slowing growth.

Data Tuesday showed the economy of the 17-nation euro zone barely grew in the third quarter. ECB President Mario Draghi has predicted the currency bloc will be in a mild recession by the end of the year.

MONTI CABINET

Against that backdrop, Italian prime minister-designate Monti is to unveil his cabinet line-up after a meeting with President Giorgio Napolitano scheduled for around 10 a.m. (British time).

His cabinet, expected to feature experts, academics and some politicians, will have the job of speeding up reform of pensions, labour markets and business regulation in order to put Italy's finances on a sustainable path.

Yields on Italy's 10-year BTP bonds climbed to over 7 percent Tuesday, the level at which Greece and Ireland were forced into bailouts. Italy must refinance some 200 billion euros (171 billion pounds) of bonds by the end of April.

In Greece, the first task facing Papademos will be to implement the painful tax hikes and spending cuts needed to secure fresh loans and stave off bankruptcy that could force Greece's eviction from the single currency.

At stake is an 8-billion-euro loan tranche that Greece needs to meet repayments due next month and a new bailout worth 130 billion euros. Greece will need some 80 billion euros of that second rescue package in early 2012.

The confidence vote is scheduled for 1 p.m. (British time) and Papademos looks certain to win. But the former ECB vice president already faces a rebellion from conservatives who form a key part of his crisis coalition.

The New Democracy lawmakers are defying a European Commission demand for a written pledge from the three coalition partners on meeting the terms of Greece's bailout.

Weary and angry after two years of austerity, tens of thousands of Greek protesters are expected to join an annual rally Thursday to mark the November 17 student uprising in 1973 that helped topple the 1967-74 military junta.

DEBATE OVER ECB ROLE

The United States is increasingly worried that Europe's debt crisis is mushrooming into a wider systemic problem.

Alan Krueger, chairman of the White House Council of Economic Advisers, said the European debt crisis was the leading risk to the U.S. recovery.

The survival of the 17-state currency zone in its existing form is at risk, and EU governments have until a summit on December 9 to come up with a bolder and more convincing strategy, involving some form of massive, visible financial backing.

Baroin, the French economy minister, told Les Echos he believed the ECB had an important role to play in calming the euro zone's debt crisis, but acknowledged, as did Geithner, that

Germany had reservations.

Many analysts believe the only way to stem the contagion for now is for the European Central Bank to buy large amounts of bonds -- effectively the sort of quantitative easing undertaken by the U.S. and British central banks.

This has been anathema in Germany. But Tuesday Peter Bofinger, a member of the group of economists that advises the German government, said the ECB should indeed become the euro zone's lender of last resort if the bloc's debt woes risked tearing apart the financial system.

If politics can't do it, then the ECB must do all it can to bring interest rates down to more reasonable levels, Bofinger said at Euro Finance Week.

(Additional reporting by Chikako Mogi in Toyko; Writing by Jon Boyle; Editing by Kevin Liffey and Michael Roddy)