LONDON, Oct 8 (Reuters) - Italy’s 10-year government bond yield climbed to fresh 4-1/2 year highs on Monday, after the European Union reiterated its concern over Italy’s budget plans while Rome remained defiant.
The European Commission has told Italy it is concerned about its budget deficit plans for the next three years since they breach what the EU asked the country to do in July, but Rome insisted on Saturday it would “not retreat” from its spending plans.
That tension between the two translated into fresh selling in Italian bonds early on Monday.
Italy’s 10-year bond yield climbed to 4-1/2 year high at 3.529 percent, while yields across the curve were around 10 bps higher on the day.
The Italian/German 10-year bond yield gap widened to 289 bps from around 284 bps late on Friday.
Reporting by Dhara Ranasinghe; Editing by Saikat Chatterjee