Italian markets hit by plans of potential political coalition to ask for debt relief, pave euro exit

The borrowing costs of Italy jumped on Wednesday, while its stocks fell due a draft program for a potential coalition government comprising the anti-establishment 5-Star Movement and the far-right League that includes some controversial measures.

The coalition plans to demand EUR 250 billion of debt forgiveness and create procedures to allow countries to exit the euro, according to Reuters, which quotes the Huffington Post Italia website.

Italy’s 10-year bond yield jumped 14 basis points to 2.08 percent, IT10YT=RR its highest level since early March. This is the biggest one-day rise since July 2017, Reuters data shows.

Italian stocks .FTMIB fell 2.5 percent, set for their biggest one-day drop since the country’s inconclusive general election in March.

Shares in Italian banks were broadly lower, with a sectoral index .FTIT8300 on course for their worst day in five months, down 2.9 percent.

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The 39-page document leaked on Tuesday also called for a renegotiation of Italy’s European Union budget contributions.