Italian Bonds Decline as Polls Indicate Hung Parliament

Italy’s bonds fell, erasing an advance that saw 10-year yields decline by the most in six months, as polls indicated the euro area’s third-largest economy may be left with a hung parliament.

Italian two-year yields reversed the biggest slide in six weeks as partial results of the country’s election suggested former Prime Minister Silvio Berlusconi may have built a blocking minority in the Senate to deny outright victory to Pier Luigi Bersani. Stefano Fassina, an aide to Bersani, said the nation may need a second election. German bunds rose as concern the results will derail austerity measures introduced by outgoing premier Mario Monti boosted demand for safer assets.