LONDON/MILAN, July 20 (Reuters) - Italian bond yields rose and equities sold off on Friday after local media reported tensions within the ruling coalition government and a newspaper interview with a lawmaker raised fresh concerns about Rome’s commitment to the euro.
Two-year government bond yields rose 8 basis points at 0.63 percent, while 10-year bond yields were 6 bps higher at 2.57 percent. That pushed the gap over German Bund yields to 225 bps from around 218 bps late Thursday.
According to a report in the Corriere della Sera, an Italian daily newspaper, Italy’s head of the budget committee in the lower house of parliament, Claudio Borghi, said Italy will come out of the euro sooner or later.
Traders also cited reports in Italian newspapers of tension between Economy Minister Giovanni Tria and the government’s two vice prime ministers. One reason for strained relations is disagreement over appointments at some state-controlled firms including state lender Cassa Depositi e Prestiti (CDP), traders said.
Italy’s FTSE MIB equity index fell one percent to underperform the broader European market. (Reporting by Dhara Ranasinghe and Kit Rees in London and Giulio Piovaccari in Milan; editing by Sujata Rao)