Italy's post-election political paralysis is spooking financial markets. But former Premier Silvio Berlusconi, whose strong showing defied pro-Europe pundits who thought he was politically finished, insists a government can be formed.

The conservative leader said Tuesday that Italians should ignore the `'crazy" markets. His center-left rivals won Parliament's lower house after votes were counted Monday. But they failed to win an absolute majority in the upper house.

Pro-Europe leaders, who were hoping Italy would stay the course of tough economic reforms, are rattled by the prospects of legislative gridlock. Berlusconi says having another election soon won't solve problems, and called on fellow leaders to `'make some sacrifices," an apparent call for a coalition government.