Silver exchange traded funds have recovered some of the losses suffered during the September meltdown with the metal trading around $35 an ounce and getting a lift from fresh uncertainty in Europe.

The region’s debt crisis is now shaking Italy, while Greece has yet to name a new prime minister after the fall of George Papandreou.

Silvio Berlusconi, Italy’s prime minister, faces a key budget vote in parliament on Tuesday.

“The essential nature of the problem is straightforward. Europe, taken as a whole, has less debt and smaller deficits than either the United States or Japan. However, there are certain countries in Europe that have a very serious debt problem. By far the worst problem is in Greece, with a debt to GDP ratio of 160%, big deficits and a very deep recession which is reducing GDP. Portugal comes next, followed by Ireland, Italy and Spain in terms of high debt and weak or shrinking economies,” David Kelly, Chief Market Strategist at J.P. Morgan Funds, wrote in a weekly outlook. [Silver ETFs Lead Bounce in Precious Metals]

Some of the largest silver ETFs include iShares Silver Trust (NYSEArca: SLV), PowerShares DB Silver Fund (NYSEArca: DBS) and ETFS Physical Silver Shares (NYSEArca: SIVR). [Gold and Silver ETFs Higher After Fed, Bernanke]

Silver has lagged gold in 2011. The iShares Silver Trust is up 12.9% year to date, compared with a 26.1% gain for SPDR Gold Shares (NYSEArca: GLD), according to Morningstar.

The stakes are getting higher in the Eurozone debt crisis. Italy is a far larger economy than Greece, and any whispers of  a default or political fallout will have more negative impact upon the market.

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