LONDON, May 16 (Reuters) - Borrowing costs in Italy jumped in early Wednesday trade, pushing out the gap over benchmark German bond yields after a report that Italy’s 5-Star and League plan to ask the ECB to forgive 250 billion euros of Italian debt.
Italian 10-year bond yields hit a two-month high at 2.003 percent, with the 6 basis points jump pushing the gap over benchmark German Bund yields to 138 bps from 129 bps late on Tuesday.
Italian 2-year bond yields rose to 0.007 percent to trade above zero percent for the first time since May 2017, according to Reuters data.
A draft of a coalition program obtained by Huffington Post Italia also calls for a renegotiation of Italy’s European Union budget contributions, an end to sanctions against Russia and plans to dismantle a 2011 pension reform that raised the retirement age.
The draft accord is likely to cause concern in Brussels and at ECB headquarters in Frankfurt. It might also dismay Italian President Sergio Mattarella, who has repeatedly stressed the importance of maintaining a strong, pro-European stance. (Reporting by Dhara Ranasinghe)