August 10, 2018 / 6:49 AM / 9 months ago

Italy's bond yields rise sharply, spread widens

LONDON, Aug 10 (Reuters) - Italy’s government bond yields rose sharply in early Friday trade as uncertainty surrounding the 2019 budget talks and turbulent world markets prompted investors to dump the euro zone’s riskiest assets.

Italy’s 10-year bond yield was up 6 basis points at 2.95 percent, while the closely watched gap over German Bund yields widened out to 263 bps from 253 bps late on Thursday.

Shorter-dated Italian bond yields jumped as much as 12 bps in early trade .

Italy should scrap a clause in its constitution obliging it to run a balanced budget, deputy Prime Minister Luigi Di Maio said, adding that the government was not yet working on the matter.

Those comments come at a time when markets fear that the big spending plans of the new anti-establishment coalition will push up Italy’s already high debt levels and spark a collision with European Union fiscal rules. (Reporting by Dhara Ranasinghe; Editing by Susan Fenton)

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