LONDON, Aug 22 (Reuters) - Italian stocks rose and government bond yields extended their declines in early trading on Thursday after Reuters reported President Sergio Mattarella wants clear signs of a possible deal to form a new government by the end of the day.
At 0730 GMT, the blue chip index was up 0.3%, reversing opening losses, while 10-year government bond yields fell 5 basis points to a new almost three year low of 1.286%.
Short-dated bond yields fell up to seven basis points and Italy’s 10-year spread over top rated Germany fell to 195 bps, its lowest since July 29.
The report citing a source close to the president said he wants parties to show “clear signals” of a possible deal to form a new government on Thursday and to make “significant developments” on the plan by early next week.
Reporting by Josephine Mason and Virginia Furness