ROME: Italy’s Silvio Berlusconi on Wednesday abandoned his bid to topple Prime Minister Enrico Letta, saying he would vote to support the government in a humiliating climbdown after key allies rebelled.

“We have decided to vote for confidence, not without internal disputes,” Berlusconi said ahead of a confidence vote in Parliament called after he launched his challenge to the leadership on Saturday.

Berlusconi said he had changed his mind on Wednesday after hearing Letta’s promise to lower taxes and “the need for a government that can carry out institutional reforms in Italy.”

The surprise about-turn made victory for Letta’s coalition a certainty and was immediately cheered by the markets, with shares in Milan jumping 1.45 percent higher after the shock announcement.

The difference between rates on Italian 10-year government bonds and benchmark German ones, a measure of investor confidence, also narrowed to 253 basis points from 260 points on Tuesday. Letta shook his head as Berlusconi was speaking and the address was followed by stunned silence.