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LONDON, Dec 5 (Reuters) - The 'No' vote in Sunday's Italian referendum brings some clarity to markets after weeks of uncertainty and makes Italy's government bonds attractive at current levels, the head of European fixed income at Franklin Templeton said on Monday.
"The referendum does bring some clarity and we don't have that hanging over us any more. Now it depends on what the government decides to do. I don't envision we will have early elections in Italy," Franklin Templeton's David Zahn told Reuters.
"Around these yield levels, Italian bonds looks attractive and we would consider reducing our underweight position," he added.
Italian government bonds and banking stocks have been pressured in recent weeks by concerns about the fallout of the vote on constitutional reform, on which Prime Minister Matteo Renzi has staked his future.
Renzi has said he will resign following the resounding 'No' vote on Sunday. (Reporting by Dhara Ranasinghe, editing by Nigel Stephenson)