LONDON, May 10 (Reuters) - Italian government bond yields jumped to a seven-week high on Thursday on an increased possibility that a government of anti-establishment parties comes into power in the euro zone’s third largest economy.
Italy’s anti-system 5-Star Movement and the far-right League are looking to end nine weeks of political deadlock following inconclusive elections and form a government.
A crucial obstacle was removed late on Wednesday when former prime minister Silvio Berlusconi, the League’s main ally, gave his green light to the talks, accepting a demand from 5-Star that his Forza Italia party take no part in the next government.
Benchmark 10-year Italian yields jumped 6 basis points to 1.94 percent in early trading and the spread between Italian debt and its German counterpart stretched to its widest levels in six weeks at 138 basis points. (Reporting by Saikat Chatterjee, Editing by Abhinav Ramnarayan)