Monti's cabinet gave its go-ahead to the crisis-busting plan on Sunday estimating that it would save 20 billion euros ($27 billion) but warning that it would not prevent the economy from slipping back into recession next year.
The government said it would meet its target of balancing the budget by 2013.
Bank shares led the rally. The price of stock in Banco Popolare rose by 6.04 percent to 0.983 euros, in Banca Monte dei Paschi di Siena by 5.27 percent to 0.2899 euros and in Intesa Sanpaolo by 3.93 percent to 1.349 euros.
Shares in insurance group Generali rose by 2.58 percent to 12.73 euros and the Fiat auto group by 2.07 percent to 3.95 euros.
The policies announced by the government to correct the state of public finances include action to stimulate activity such as a reduction of charges on companies that recruit people, particularly young people and women.