The German chancellor on Monday urged the populist and a far-right Italian parties currently trying to build a functioning government to respect the values of the eurozone.

Angela Merkel addressed a Global Solutions summit in Berlin while, in Italy, President Sergio Mattarella grappled with the task of appointing a candidate to form a new government after he rejected the nomination of a eurosceptic finance minister put forward by the Five Star Movement (M5S) and the far-right League parties, prompting calls from the anti-establishment leaders.

"We want to collaborate with all governments, but we have principles in the eurozone," said the Chancellor, whose own election campaign in Germany this year saw her lose ground to a rising eurosceptic far-right party, Alternative for Germany (AfD).

Deciding that 81-year-old Paolo Savona was unfit for the post of finance minister, Mattarella accepted the withdrawal of Giuseppe Conte's bid to become prime minister and instead asked former International Monetary Fund director Carlo Cottarelli to form a functioning executive.

Italy has been in a political stalemate since the hung parliament that resulted from elections in March.