LONDON Oct 2 Italian bond futures firmed on
Wednesday on expectations the government will survive any no
confidence vote with the support of senior members of former
premier Silvio Berlusconi's party.
Government tensions increased after five centre-right
ministers resigned at the weekend over feuds about an imminent
sales tax hike. But Berlusconi's allies have also threatened to
bring the government down if the media tycoon was evicted from
parliament following his tax fraud conviction.
Divisions within his party widened sharply this week,
however, easing concerns about a fresh round of potentially
Sources in Prime Minister Enrico Letta's centre-left
Democratic Party said late on Tuesday he had not yet decided
whether to call a formal vote of confidence in parliament on
Wednesday after a frantic round of meetings.
"I would imagine (gains) could go a bit further on hopes
Letta can scoop some votes from Berlusconi's party and the
government will survive," one trader said.
BTP futures opened 50 ticks higher on the day at
German Bund futures were 2 ticks up at 140.28
before a European Central Bank meeting later on Wednesday. While
the bank is not expected to make any changes in its monetary
policy, investors will be looking for any new hints on whether
it could offer new long-term unlimited loans to banks (LTROs) to
keep liquidity ample and short-term rates low.
"I think they'll leave the door open for new LTROs but I
don't think he'll signal anything imminent and that's probably
the market view as well," the trader said.
The reaction to a U.S. government shutdown remained muted as
markets expected it to be temporary.