August 3, 2018 / 7:00 AM / 4 months ago

Italian bonds sell off further, analyst cites fresh election worries as cause

LONDON, Aug 3 (Reuters) - Short-dated Italian government bonds sold off for a second day in a row on Friday on continued speculation over a meeting of key officials within the Italian government, which has been reported across Italian newspapers on Thursday and Friday.

Commerzbank strategist Christoph Rieger said investors were worried that fresh elections could be triggered if Economy Minister Giovanni Tria is forced to resign.

Italy’s two-year and five-year government bond yields rose about 25-27 basis points in early trade, hitting their highest levels since early June.

The country’s borrowing costs jumped on Thursday on reports that key government officials including Tria and Deputy Prime Minister Matteo Salvini were due to meet to discuss the Italian budget.

Tria is under pressure from within the government to ramp up spending and challenge EU budget rules. (Reporting by Abhinav Ramnarayan)

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