December 9, 2016 / 1:47 PM / a year ago

Italian bond yields rise on Monte dei Paschi reports, safe haven Bund yields tumble

LONDON, Dec 9 (Reuters) - Italian bond yields rose, while safe-haven German bond yields extended their falls on Friday on heightened concerns about the future of troubled Italian lender Monte dei Paschi.

A consortium of investment banks that must decide whether to underwrite a privately-backed 5-billion euro rescue plan for the bank believes there is not enough time and no willing investors to execute the deal by a year-end dead line, a source said on Friday.

Another source told Reuters earlier that the European Central Bank had rejected a request by the ailing lender for more time to raise capital, in a move that piles pressure on the Italian government to bail out the bank.

Ten-year Italian yields reversed earlier falls, and were almost 1 bps higher on the day at 2.05 percent, widening the gap with German peers to around 172 bps.

Germany’s 10-year Bund yield was down 7 bps on the day at 0.33 percent.

Monte dei Paschi shares tumbled 7 percent.

Reporting by Dhara Ranasinghe; Editing by John Geddie

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