April 16, 2019 / 10:15 AM / in 8 days

Italian bonds, stocks sell off as Bank of Italy warns of 3.4 pct deficit in 2020

LONDON, April 16 (Reuters) - Italian stocks and government bonds sold off on Thursday after a Bank of Italy official said the country’s deficit would rise to 3.4 percent of GDP in 2020 — thereby breaching European Union regulations — without an increase in VAT tax.

Italy’s borrowing costs were up 5-8 basis points across the curve on the news, with the benchmark 10-year bond yield rising 7 bps to a one-week high of 2.63 percent.

Italy’s stock index fell after the comments and was down 0.3 percent at 1011 GMT. (Reporting by Abhinav Ramnarayan; editing by Josephine Mason)

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