LONDON, May 16 (Reuters) - Italian 10-year bond yields pulled back from 2-month highs on Wednesday, tightening the gap over German peers after Italy’s far-right League said a request for a cancellation of 250 billion euros of debt was not in a draft government programme.
Italian bond yields had jumped at the open after a report that Italy’s 5-Star and League planned to ask the European Central Bank to forgive 250 billion euros of Italian debt.
But the comments on Wednesday from the League’s economic spokesman brought some comfort to markets.
Italy’s 10-year bond yield was up 5 basis points at 1.98 percent, off earlier 2-month highs just above 2 percent . The Italian/German 10-year bond yield gap tightened to 136 basis points from 139 basis points at the open.
Italy’s FTSE MIB rose from earlier lows but remained in negative territory, down 0.5 percent on the day, while the country’s banking index fell 0.8 percent, also reducing losses. (Reporting by Dhara Ranasinghe and Danilo Masoni in MILAN; Editing by Saikat Chatterjee)