The Italian Senate has approved new austerity measures, the first step to ease the country's financial crisis and open the path for the expected resignation of Prime Minister Silvio Berlusconi.

The upper house of the Italian Parliament approved the financial reforms Friday, with the lower Chamber of Deputies expected to give its assent on Saturday. When final approval of the austerity plan occurs, Mr. Berlusconi has said he will resign as the country's leader.

That is likely to lead to formation of a new government headed by former European Union Competition Commissioner Mario Monti. Italian President Giorgio Napolitano earlier this week named Monti a senator for life, and senators applauded him in the chamber Friday.

In Greece, Lucas Papademos was sworn in Friday as interim prime minister, to head a coalition government that hopes to rescue that country from a deep financial crisis. His new cabinet includes Finance Minister Evangelos Venizelos, a key figure from the outgoing government of Socialist Prime Minister George Papandreou.

European and U.S. stock markets jumped Friday as investors welcomed the news from Italy and Greece.

The Greeck transitional government will implement deeply unpopular budget cuts required by European leaders in order to secure the next installment of a rescue package that would keep Greece from going bankrupt within weeks.

Mr. Papademos said the coalition government would “do the best it can” to solve the country's economic woes. The new leader said he expects to be successful, if the country is unified.

Italy has the third largest economy in the eurozone, but its economic growth is stagnant and the country has accumulated a staggering $2.6 trillion in public debt. Its borrowing costs topped 7 percent this week, the threshold that forced Greece, Ireland and Portugal to seek international bailouts. But with Italian lawmakers on track to adopt the austerity plan, the interest has now retreated below the 7 percent mark.

The Italian austerity measures include the sale of $20 billion worth of government property, opening up closed professions and increasing the country's retirement age from 65 to 67 by 2026.