Italy's head of debt says referendum can feed volatility

MILAN, Oct 14 (Reuters) - A referendum vote Italy will hold on Dec. 4 on the government’s constitutional reform could easily feed market volatility, the head of public debt Maria Cannata said on Friday.

Italy has the world’s fourth-largest public debt and its borrowing costs risked spiralling out of control in 2011-2012. The crisis abated thanks to bond purchases by the European Central Bank which have driven yields to record lows and Cannata said Rome paid just 0.52 percent on average to raise funding in the first nine months of the year.

Asked about the referendum vote at a conference in Milan, Cannata said it would take very little to feed market volatility and that investors’ perception of rising political risk in Italy was behind the widening of the yield gap with Spain.

Reporting by Luca Trogni and Elvira Pollina, writing by Valentina Za