Italy's anti-establishment 5-Star Movement has rejected overtures from centre-left leader Pier Luigi Bersani to form a government after last month's deadlocked general election.

The refusal by the group – led by ex-comic Beppe Grillo – was expected, as it had repeatedly said it would not back any of the big parties it blames for Italy's social and economic crisis.

"There are no conditions that would allow us to give a confidence vote to a government made up of these parties," the group's Senate leader Vito Crimi said after meeting Mr Bersani yesterday. The rejection means Italy remains in political stalemate. Mr Bersani's alliance has a majority in the Lower House of Parliament but not the Senate, leaving it unable to govern on its own.

The impasse, at the same time as the bank crisis in Cyprus, is being watched closely by European partners and investors mindful of the market turmoil which brought down Silvio Berlusconi's government in 2011.

Mr Bersani has already ruled out forming a coalition with Mr Berlusconi's centre-right bloc. He is expected to see President Giorgio Napolitano later this week to report on the meetings he has held with rival parties.

If he cannot reach an agreement, Mr Napolitano may appoint an outsider to try to form a technocrat government. If that fails, Italy faces a return to the polls.