MILAN, June 4 (Reuters) - Italian banks and sovereign bond prices rose on Tuesday with traders citing comments from Italian Prime Minister Giuseppe Conte, who said that the government had to abide by EU budget rules until such time as they could be changed.
Shares in Italian banks rose 1.7% by 0813 GMT, further recovering from the September 2016 lows hit last week.
Yields across the government bond curve were down 4-5 basis points on the day as prices rose. That pushed the gap between Italian 10-year bond yields and safer German peers to 272 bps — its tightest in just over a week.
Conte made the remarks after the market closed on Monday. He also told his two coalition partners to end their constant feuding or seek new elections, threatening to resign. (Reporting by Danilo Masoni and Dhara Ranasinghe)