LONDON, Oct 23 (Reuters) - Italian government bond yields rose on Tuesday as markets awaited the European Union’s official response to Rome’s 2019 budget proposal.
After a strong but relatively short-lived rally on Monday, Italian two-year government bond yields opened 10 basis points higher at 1.56 pct, while 10-year yields were up eight basis points to 3.55 pct.
The closely watched Italy-Germany bond yield gap remained well above 300 basis points at 312.6 bps, having hit a 2-1/2 week low of 281 bps on Monday.
Italy told the commission on Monday it would stick to its contested 2019 budget plans in defiance of European Union fiscal rules, but promised not to inflate its deficit any further in the years ahead. (Reporting by Virginia Furness; editing by Sujata Rao)