LONDON, March 18 (Reuters) - A selloff in Italian government bonds abated on Wednesday as a source-based report said that the Bank of Italy had stepped into to buy Italian bonds on behalf of the European Central Bank to stabilise a highly volatile market.
Earlier in the day, Italian 10-year bond yields had jumped over 60 points as panic gripped bond markets and thin trading conditions exacerbated price action.
The selling waned after a report that the Bank of Italy is buying Italian paper as the system of euro zone central banks intervenes to ensure orderly conditions on the bond market.
Italy’s 10-year bond yield was last up 40 bps on the day at 2.78% but off a session high just above 3%. The gap over safe German Bund yields narrowed to 301 bps from a high of almost 320 bps (Reporting by Dhara Ranasinghe; Editing by)