LONDON, Dec 29 (Reuters) - Italian government bond yields rose to fresh two-month highs on Friday after the president dissolved parliament on Thursday afternoon and a general election was scheduled for March 4.
The vote is expected to produce a hung parliament which could result in instability and possible market turbulence for the euro zone’s third largest economy.
The yield on Italy’s 10-year government bond rose to 1.978 percent, up 3 basis points on the day. The bond yield spread over benchmark German Bunds was also at its widest since late October at 154 bps. (Reporting by Abhinav Ramnarayan, editing by Karin Strohecker)