I would like to label a business letter personal & confidential to a
company in italy.

What markings in italian should I place on the package?

(i.e. in the US I usually just write "Personal & Confidential" on the
outside of the package and on the header of the letter.) So at the
least, I am looking for the proper phrase customarily used to indicate
the same idea in Italian.

Hello

The correct phrase is "Riservata Personale", sometimes abbreviated as
RP.
On this page of abbreviations used in Italian letter-writing, you will
see it is translated as "personal and confidential":
http://www.chass.utoronto.ca/~ngargano/corsi/corrisp/abbreviazioni.html

By the way, clicking on the links at the bottom of the page will lead
you to several other pages about writing letters in Italian, including
these pictures of how to address the envelope:
http://www.chass.utoronto.ca/~ngargano/corsi/corrisp/busta.html

Back on the abbreviations page you will find that Gent.mo Sig.
(gentilissimo Signore) from the first line of the address translates
as Dearest Mr.

I hope this helps. Please let me know if anything needs clarification.

Regards - Leli


search strategy:

I knew 'lettera riservata' was a confidential letter and, after a few
other tries, I found that using the word 'correspondenza'
(correspondence) with that phrase produced these search results:
://www.google.co.uk/search?hl=en&ie=UTF-8&oe=UTF-8&q=lettera+riservata+corrispondenza&btnG=Google+Search&meta=
On the first page of that list I clicked on 'Abbreviazioni'.