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Italian Bonds, Stocks Fall

Italian Bonds, Stocks FallItalian Bonds, Stocks Fall

Italian bond yields rose and equities sold off on Friday after local media reported tensions within the coalition government and a newspaper interview with a lawmaker raised fresh concerns about Rome’s commitment to the euro, Reuters reported. Two-year government bond yields rose eight basis points at 0.63% and 10-year bond yields were six bps higher at 2.57%. That pushed the gap over German Bund yields to 225 bps from around 218 bps late Thursday. Traders also cited reports in Italian newspapers of tension between Economy Minister Giovanni Tria and the government’s two vice prime ministers. One reason is disagreement over appointments at some state-controlled firms including state lender Cassa Depositi e Prestiti, traders said. The deputy prime ministers have issued an ultimatum to Tria that he should back the government’s nominees for key posts at the companies or resign. La Stampa and Repubblica, in unsourced reports, said LuigiDi Maio and Matteo Salvini want Tria to back several nominations, which he has so far not done.

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