November 26, 2018 / 7:26 AM / 16 days ago

Italian govt bond yields drop as Salvini hints at deficit tweak

LONDON, Nov 26 (Reuters) - Italian government bond yields fell to two-month lows in early trade on Monday after press reports pointed to a more conciliatory budget tone from Italy’s government over the weekend.

Italy’s 10-year government bond yield was last down 10 basis points at 3.31 percent, a three-week low, while its spread over higher-rated Germany was at its tightest in over two-weeks at 294 basis points,.

Italian Deputy Prime Minister Matteo Salvini hinted on Sunday at the possibility of tweaking the country’s deficit goal for next year, a move that could open a negotiation between Rome and Brussels to avoid a disciplinary procedure against Italy.

Italy’s government will meet on Monday evening to discuss a potential reduction of its deficit goal, a government source said on Monday, in a move that could open negotiations between Rome and Brussels to avoid a disciplinary procedure against Italy.

Italy’s five-year govt bond yield also touched a two-month low at around 2.37 percent, down 13 basis points on day . (Reporting by Virginia Furness; Editing by Dhara Ranasinghe)

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