Rome

Italian spread drops, stocks gain on Napolitano re-election

Formation of new government now seen as likely

Italian spread drops, stocks gain on Napolitano re-election

Rome, April 22 - Pressure on Italian bonds eased and shares on the Milan stock exchange posted big gains in early trading on Monday after President Giorgio Napolitano was re-elected on Saturday. The re-election has boosted hopes Italy will soon have a new government after two months of political deadlock following February's inconclusive general election. The spread between the 10-year Italian bond and the German benchmark, a key measure of Italy's borrowing costs and of investor confidence, dropped to 288 basis points with a yield of 4.14% after closing at 297 points on Friday. At one stage early on Monday the spread fell as low as 279 before climbing back up eight points. The Milan stock exchange's FTSE Mib index gained 2% in just over an hour and a half of trading, with shares in banks leading the way. UBI gained 5%, Banco Popolare 4.27% and Unicredit was up 3.92%.

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