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5-Star leader Luigi Di Maio called for a snap election to be held after talks to form a coalition government floundered.
Italy's 10-year bond yield was last up almost 5 basis points at 1.78 percent, underperforming euro zone peers.
That pushed the gap over German Bund yields to 121 bps, the widest in almost two weeks.
"Fresh elections would mean more uncertainty but we have to keep in mind that the market has remained calm so far," said DZ Bank rates strategist Daniel Lenz. "But this is a bit of a surprise and might explain why Italy is an underperformer today."