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Italian Markets Feel the Heat as Anti-Establishment Parties Surge

  • Drop in Italian assets contained as final results awaited
  • Yield spread to German bonds can widen to 150 bps: ING
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Italy Is Down the List of Worries for Euro, Says Economist Dixon

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Political risk is back again in Italy.

The nation’s government bonds and stocks fell after elections signaled a hung Parliament and a surge of support for anti-establishment parties, though declines were limited as markets awaited the final results. Earlier on Monday the euro weakened, but the currency was cushioned by news that Germany’s Social Democratic Party voted to join Angela Merkel’s next government.