Italy's bond yields fall after reports Rome negotiating to lower deficit

LONDON: Italy's borrowing costs fell to their lowest level in around two months on Monday after two newspapers reported Italy is negotiating with the EU to reduce its 2019 target for the budget deficit to 2.0 percent of gross domestic product, or even below.

"Yes, these are the figures," Italian Finance Minister Giovanni Tria answered to a question whether Italy is negotiating a deficit to GDP ratio reduction to 2.0 percent or 1.9 percent, from the present target of 2.4 percent, said La Repubblica daily.

Italy's two-year bond yield fell 5 basis points in early Monday trade to 0.80 percent, its lowest level just over two months.

Ten-year Italian bond yields also hit a two-month low, at 3.16 percent. That narrowed the gap over benchmark German Bund yields to 282 bps from around 291 bps late Friday.

Better sentiment towards risk assets as trade war fears eased following a meeting of U.S. and Chinese leaders at the weekend also helped push down Italian bond yields.