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LONDON, June 8 (Reuters) - Italy's government bond yields and banking stocks fell on Thursday after a report that Italian banks are considering a joint rescue of two ailing Veneto-based lenders.
Italian banks are considering assisting in a rescue of Popolare di Vicenza and Veneto Banca by pumping 1.2 billion euros ($1.4 billion) of private capital into the two regional banks, sources familiar with the matter told Reuters.
Italy's benchmark 10-year government bond yield fell 1 basis point to 2.28 percent, the day's low.
That helped narrow the gap over benchmark 10-year German Bund yields to around 200 basis points after the spread moved to its widest in more than a month on Wednesday.
In contrast to the positive tone in Italian bond markets, the country's banking stocks dipped 0.2 percent while broader euro zone bank shares gained 0.6 percent. (Reporting by London Markets Team; editing by Nigel Stephenson)