Italy's Finance Minister Tremonti speaks during a news conference at Chigi Palace in Rome
Italy's Finance Minister Giulio Tremonti speaks during a news conference at Chigi Palace in Rome August 13, 2011. REUTERS

Italy's top financial officials will meet later Wednesday as escalating market turmoil threatens to push the euro zone's third largest economy into a debt crisis that could threaten the whole currency bloc.

Economy Minister Giulio Tremonti, Bank of Italy Governor Ignazio Visco, Treasury head Vittorio Grilli and the heads of insurance regulator ISVAP and markets watchdog Consob are due to meet at 3 p.m. (10 a.m. EDT), the Treasury said in a statement.

The meeting of the Financial Stability Safeguard Committee comes as yields on Italian government bonds have climbed past 6 percent and the risk premiums over German bonds have reached record levels.

Yields on 10-year Italian BTP bonds opened slightly lower on Wednesday, hovering around 6.1 percent while the spread over benchmark German Bunds was around 426 basis points, down from the euro-era highs of more than 450 points a day earlier.

Greece's surprise decision to call a referendum on austerity measures demanded by the European Union has thrown markets into turmoil and worsened fears about the stability of other heavily indebted economies like Italy.

Prime Minister Silvio Berlusconi, under mounting pressure to resign, has pledged to press ahead with new economic reforms and is expected to meet ministers ahead of a meeting with leaders of the Group of 20 economic powers in Cannes on Thursday.

Too big to bail out if its borrowing costs get out of control, Italy has a mix of sluggish growth, a divided and ineffective government and a public debt equivalent to 120 percent of gross domestic product that poses a growing threat to the survival of the euro.

In a sign of growing alarm, President Giorgio Napolitano -- never an ally of the premier -- issued a highly unusual statement late Tuesday, calling on Berlusconi to pass reforms without delay and indicating he was looking at how much support there was for reform outside the ranks of the current center-right government.

His statement followed a separate declaration from Italy's main business and banking federations, calling on Berlusconi to act immediately or draw the consequences.

(Reporting By James Mackenzie; editing by Andrew Roche)