Italian stocks, banks lead Europe as budget deficit fears quelled

October 3, 2018

By Helen Reid

LONDON (Reuters) – Italian stocks turned from a drag into a boost for European markets on Wednesday as signs the government would target a lower budget deficit quelled investors’ fears of a damaging showdown with the European Commission.

Italian bank stocks (FTIT8300) jumped as much as 3 percent after government bond yields fell back and the spread to Bunds narrowed thanks to reports the government was targeting a lower budget deficit in 2020 and 2021.

Still in the thrall of developments on the Italian front, the leading euro zone stocks index (STOXX50E) and the pan-European STOXX 600 (STOXX) climbed 0.3 percent with bank stocks (SX7P) the best-performing, up 0.8 percent.