Italian, other bond yield spreads narrow - Tradweb

LONDON, June 9 (Reuters) - The premium investors demand to hold 10-year Italian and other euro zone government bonds rather than German debt fell on Wednesday as investors mulled the implications of a call to ban short-selling of some securities.

The 10-year Italian/German government bond yield spread IT10YT=TWEBDEU10YT=TWEB narrowed by 17 basis points on the day to 161 bps, reaching its narrowest level since June 3, according to Tradeweb data.

The 10-year French/German government bond yield spread <FR10YT=TWEB narrowed by six bps on the day to 50 bps, while the 10-year Spanish/German government bond yield spread ES10YT=TWEB narrowed to 203 bps from 213 bps at the European settlement close on Tuesday.

Earlier, the European Commission said it welcomed a call from France and Germany for an EU-wide ban on short-selling of shares and sovereign bonds. [ID:nBFA001207]

The French and German leaders urged Brussels in a letter to accelerate efforts to impose tougher controls for credit default swaps on sovereign bonds and short selling. [ID:nLDE6580AA]

"There is a general unwinding of risk-averse trades, with Italian BTPs leading the way. The idea of a ban on credit default swaps means that any caught short in peripherals will want to cover them and thus yield spreads will narrow," said a senior bonds trader in London.

(Reporting by George Matlock)