By Tommy Wilkes
LONDON (Reuters) – The euro rallied on Monday as a fall in Italian government borrowing costs after their recent surge introduced some calm into the market, while the promise of more Chinese stimulus helped offset broader political worries.
Rating agency Moody’s downgraded the Italian government’s credit rating on Friday but unexpectedly kept the outlook at stable.
That, together with comments by Deputy Prime Minister Luigi Di Maio that the government was ready to sit down with the European Union amid the ongoing row over Rome’s budget, boosted demand for Italian debt after a sharp selloff in recent weeks.
The euro has often fallen this year when Italian government bond yields have spiked higher.
The single currency rose 0.3 percent to $1.1550 (EUR=), hitting the day’s high and away from recent lows of $1.1433.