Prime Minister Mario Monti will meet representatives of Italy's business and banking community in Milan on Monday, extending a tour of financial capitals aimed at showcasing his government's reform drive in the face of an impending deep recession.

The meeting, due to take place at the Italian Stock Exchange at 9:30 a.m. British time, comes after Monti met scores of mostly foreign investors at similar gatherings in London and New York over the last month.

People invited to the meeting in Milan say participants will include executives from Italy's listed companies as well as bankers and investors.

I expect Monti to confirm he will continue with the steps he has already taken, said one investor who has been invited to the meeting.

Monti, who is also Treasury Minister, has been extremely active in talking to international investors to convince them of the soundness of Italy's efforts to put its fiscal house in order despite recent cuts of its sovereign credit grade by rating agencies and an expected 1.5 percent contraction in economic output this year.

Monti's ability to reach out to the financial community is a change in style from his predecessor Silvio Berlusconi, who threw in the towel in November after failing to contain the impact on Italy of a spiralling euro zone financial crisis.

The country needs to retain investors' confidence to continue to refinance its mammoth 1.9 trillion euro debt. It must repay some 90 billion euros of bonds between February and the end of April alone.

Maria Cannata, Director General in charge of public debt at the Italian Treasury, said on Saturday that foreign investors -- who drastically cut their exposure to Italy towards the end of 2011 -- were starting to show renewed appetite for the country's government bonds.

We are seeing an increase in buying interest and not only from Italy, but also from Germany, France, the Netherlands, the UK and lately also from Asia and the United States, Cannata said in reference to the trend over the last two weeks.

Confidence and trust in the country has come back, said Cannata, who was attending a business forum in Parma, Italy.

The situation is still challenging, but not alarming anymore, unless we see an explosion of the Greek situation.

The yield spread between 10-year government bonds and their German equivalent peaked at 576 basis points in mid-November, a level that could have made Italy's debt unsustainable if maintained over the long-term. It currently stands below 400 basis points.

(Reporting By Lisa Jucca; additional reporting by Maria Pia Quaglia; Editing by David Cowell)