* Italian stocks, bonds fall on Berlusconi threat * Weak U.S. goods data tempers September Fed tapering view * Gold briefly tops $1,400 an ounce * Currency markets subdued, dollar finds support after dip By Marc Jones LONDON, Aug 26 (Reuters) - The risk of a new government crisis sent Italian shares and bonds tumbling on Monday, while a weaker dollar and lower U.S. debt yields gave battered emerging markets a second day of relative calm. Wall Street was expected to start down around 0.1 percent when trading resumes, with investors already digesting data that showed weaker than expected durable goods orders. The dollar slipped against the yen and gold traded near 11-week highs, briefly topping $1,400 an ounce after similarly-poor U.S. housing data on Friday prompted some investors to hedge bets on an imminent move by the Federal Reserve to unwind monetary stimulus. The debate over the Fed's plans and its impact on emerging economies has dominated markets in recent weeks, but it was the euro zone crisis that was back in the spotlight on Monday. Members of Silvio Berlusconi's centre-right People of Freedom (PDL) party said on Sunday they would force early elections if their centre-left coalition allies voted next month to expel the former Italian premier over a tax fraud conviction. Italian shares were down more than 2.5 percent by early afternoon, leading the broader euro zone stock market lower, and the country's bonds fell, taking Spanish and Portuguese bonds down with them. Investors are worried the country's plans to mend its finances will fall apart if the coalition crumbles and that a period without a government could make it tricky for the European Central Bank to shield it from market pressure. "If you have new elections now there is a high risk you would not have a majority government so that is why we are seeing a widening of spreads in the periphery," said ING rate strategist Alessandro Giansanti, adding the timing is poor given Italy is set to sell bonds this week. European stock market volatility was up almost 5 percent and German government bonds, an asset favoured at times of stress, were in demand, although in currency markets there was little movement from the euro. EMERGING LULL After the turmoil of last week, share indexes in India made ground though there were modest falls in Indonesia and both countries' currencies weakened again against the dollar.. Investors are expecting improving returns from advanced economies while India, Indonesia and Brazil have all scrambled in recent weeks to try to stem destabilising outflows that have crippled their currencies. Global central bankers at the Fed's annual Jackson Hole policy conference were warned over the weekend that financial stability was at risk as ultra-easy policies that have flooded the world with cash were slowly unwound. U.S. Treasury yields tend to set the benchmark for borrowing costs across the globe, so their recent rise - which is expected to continue as the Fed winds down support - is making it more difficult for indebted countries and firms to pay their bills. Yields dropped to 2.7963 percent after the U.S. durable goods orders from above 2.8 percent beforehand. 'MONETARY MORPHINE' John Hardy, head of FX strategy for Saxo bank, said the Fed was bound to take measures if the turmoil in markets over its stimulus scale-back didn't settle down. "The evidence we have seen since 2008 is that every time things get a little ugly the Fed steps in with more liquidity, so they will do whatever they have to do," he said. "Markets have been dependent on monetary morphine for forever so why not just have another big hit of it." The weak goods numbers compounded the impact of data on Friday which showed sales of new U.S. family homes fell to their lowest in nine months, raising doubts about whether the Fed can afford to start to pull back next month and giving investors an excuse to buy back beaten-down assets. Against the yen, the dollar traded at 98.3360 off Friday's peak of 99.15, while the euro bought $1.3372, having climbed as high as $1.3410. Spot gold, which as an inflation hedge has benefited from the global flood of liquidity, briefly popped above $1,400 an ounce for the first time since early June, extending Friday's 1.5 percent rally. It last stood at $1,397.50. U.S. crude was slipping at $106.25 a barrel, while Brent was back at $110.75 began having earlier extended gains above $111 a barrel as rising tensions in Syria added to concerns of increased unrest in the Middle East that could disrupt supply. In Shanghai trading, copper rose to its highest in over four months in moves traders said were amplified by the closure of London markets for a public holiday.