(Changes day from Tuesday to Thursday in first paragraph)
LONDON, May 31 (Reuters) - Investors returned to the Italian government bond market on Thursday, forcing the country’s borrowing costs lower, on increased expectations an early election could be avoided and a political crisis could ease.
Italy searched for a last-minute exit from almost three months of political turmoil on Wednesday, with its biggest party 5-Star Movement looking to make a renewed attempt to form a coalition government with the right-wing League.
Italy’s 2-year government bond yield, which has been the focus of a recent selloff, was down as much as 50 basis points at 1.45 percent.
The country’s benchmark 10-year bond yield was down 20 bps at 2.85 percent, while the closely watched Italy/Germany 10-year bond yield spread tightened to 248 bps, as much as 22 bps tighter than Wednesday’s close. (Reporting by Abhinav Ramnarayan; Editing by Toby Chopra)