April 30, 2018 / 11:53 AM / a year ago

Italian bonds under pressure on prospect of early elections

LONDON, April 30 (Reuters) - Italian bond yields rose on Monday, pushing the gap over top-rated German peers to the widest in almost two weeks, after the anti-establishment 5-Star Movement raised the prospect of fresh elections in the euro zone’s third biggest economy.

5-Star leader Luigi Di Maio called for a snap election to be held after talks to form a coalition government floundered.

Italy’s 10-year bond yield was last up almost 5 basis points at 1.78 percent, underperforming euro zone peers.

That pushed the gap over German Bund yields to 121 bps, the widest in almost two weeks.

“Fresh elections would mean more uncertainty but we have to keep in mind that the market has remained calm so far,” said DZ Bank rates strategist Daniel Lenz. “But this is a bit of a surprise and might explain why Italy is an underperformer today.” (Reporting by Dhara Ranasinghe; editing by Sujata Rao)

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