LONDON, Oct 12 (Reuters) - Italy’s 10-year bond yield fell to its lowest level in almost three weeks on Thursday after the Italian government won two confidence votes on a fiercely contested electoral law that is likely to penalise the anti-establishment 5-Star Movement.
The proposed voting system is backed by three of the country’s four largest parties, with the centre-left government looking to rush it onto the statute books ahead of elections due by May 2018.
The confidence votes late on Wednesday boosted sentiment towards Italian assets.
Italy’s 10-year bond yield fell 3 basis points to 2.137 percent, its lowest level since Sept. 25.
That squeezed the gap over top-rated German 10-year bond yields to 169 basis points -- its tightest in around two weeks. (Reporting by Dhara Ranasinghe; Editing by Catherine Evans)