October 19, 2018 / 11:00 AM / 10 months ago

UPDATE 1-Foreigners shed 17 bln euros of Italian govt bonds in August

(Adds details)

MILAN, Oct 19 (Reuters) - A foreign sell-off of Italian government bonds resumed in August after a pause the previous month, data showed on Friday.

Balance of payment data published by the Bank of Italy show foreign investors cut their holdings of Italian government bonds by 17.4 billion euros ($20 billion) in August.

The sell-off began in May after elections that put a populist government into office. Concerns over the government’s budget plans have since pushed Rome’s debt costs to four-year highs. Foreign holdings of Italian debt have dropped to the lowest in more than a year.

Foreign investors dumped 58 billion euros of Italian bonds in May-June, adding however 8 billion euros in July.

Sales of Italian assets by foreigners worsen Rome’s position within the Target2 system that settles cross-border payments in the euro zone.

The Target2 figure tracks the Bank of Italy’s liabilities towards other central banks, highlighting imbalances within the single-currency bloc.

Italy’s Target2 debt rose to a record high of 492.5 billion euros in August, easing slightly to 489.2 billion euros in September. ($1 = 0.8734 euros) (Reporting by Stephen Jewkes and Sara Rossi, writing by Valentina Za, editing by Larry King)

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