Italy Shares Higher Despite Moody's Downgrade, EU Warnings

Italian shares were higher early Monday despite Moody's cutting Italy's credit rating on concerns about the populist government's plans to increase public spending, which also face strong EU opposition.

Milan, (UrduPoint / Pakistan Point News - 22nd Oct, 2018 ) :Italian shares were higher early Monday despite Moody's cutting Italy's credit rating on concerns about the populist government's plans to increase public spending, which also face strong EU opposition.

Shortly after the open, the FTSE Mib Index was up 1.82 percent at 19,428 points but it then slipped back to show a gain of 1.49 percent.

Other European markets were also higher, helped by a strong performance overnight in Asia.

London added 0.44 percent, Frankfurt rose 1.0 percent and Paris was up 0.9 percent.

Italian government bonds also rallied sharply, reflecting hopes that Rome may avoid a confrontation with Brussels over the budget.

In early trade, the Italian 10-year government bond yield was at 3.

39 percent, down nine points, narrowing the spread with the benchmark German bond to around 2.90 percent, compared with recent levels well above 3.00 percent.

On Friday, Moody's cut Italy's credit rating by a notch, citing concerns over the populist government's plans to increase public spending sharply after years of austerity.

Increased spending will push the budget deficit up to 2.4 percent of annual economic output next year, triple the amount previously forecast and coming close to the EU limit of 3.0 percent.

That in turn will only aggravate Italy's already massive debt mountain, at some 130 percent of GDP, way above the EU 60 percent ceiling and second only to Greece's in Europe.