LONDON Dec 13 The premium Italy's pays to
borrow in bond markets compared with benchmark Germany fell to
its lowest in over a month on Tuesday after new Prime Minister
Paolo Gentiloni unveiled an almost unchanged government and
Unicredit announced a share issue.
Italy's largest bank said it would raise 13 billion euros to
clean up its balance sheet, and the Treasury signalled it was
ready to pump capital into ailing Monte dei Paschi. Both
developments reassured investors, analysts said.
"The uncertainty of a major government reshuffling has been
removed and investors appear to be cheering developments in the
banking sector as well," Commerzbank strategist David Schnautz
Italian 10-year government bond yields fell 7 basis points
to 1.94 percent, narrowing the gap with German
equivalents to 155 basis points -- its tightest
since early November, according to Reuters data.
(Reporting by John Geddie, editing by Nigel Stephenson)