(Updates with comments from Bosomworth, changes dateline pvs FRANKFURT)
BERLIN, July 12 Pimco, the world's top bond fund manager, is using the latest selloff in Italian government debt to increase its holdings, according to Andrew Bosomworth, the head of its fixed income portfolio management.
"We're using the dislocations in the market to reduce underweights in Italy," Bosomworth told Reuters. "Italy is not in the same boat as the peripherals. They're not comparable. Italy has a debt stock problem but it's not comparable to Greece in terms of institutions and track records."
Bosomworth said he was not talking up his portfolio. He said Pimco was starting from an underweight position.
German daily Die Welt reported earlier in an excerpt of a story to appear on Wednesday that Pimco believes the selloff in Italian debt is exaggerated and presented an opportunity to buy bonds.
Bosomworth was quoted as saying that a big chunk of its bonds are held by Italian savers. Pimco, which manages $1.2 trillion assets, is a unit of Europe's biggest insurer Allianz .
Yields on 10-year Italian government debt jumped 30 basis points to break 6 percent on Tuesday for the first time since 1997, edging closer to a 7 percent threshold after which Italy is broadly seen losing the ability to finance itself, analysts say.
If the market does not stabilise, the European Central Bank must take steps to ensure the situation does not lead to a domino effect, Bosomworth told Die Welt.
"It would have to buy government debts massively in order to stop the rates from rising," he said, but added that he did not expect the situation to spin out of control. (Reporting by Erik Kirschbaum in Berlin and Marilyn Gerlach in Frankfurt; Editing by Elaine Hardcastle and Susan Fenton)