Italian Finance Minister Giovanni Tria commits to euro, aims to cut debt

Giovanni Tria is Italy's new economy minister

Giovanni Tria is Italy's new economy minister

"Maybe Tria's comments are a bit more blunt and reassuring than markets were expecting and that explains the move in Italian bonds, but we are still in an illiquid market for BTPs (index-linked Italian government bonds) and that's illustrated in the market reaction", said ING senior rates strategist Martin van Vliet.

"These will be fully coherent with the objective of continuing on the path of lowering the debt/GDP ratio", he said.

Tria, a little-known economics professor who is not affiliated to any party, said the coalition was committed to remaining within the single currency.

Italian bank stocks.FTIT8300 climbed 5.9 percent, their biggest one-day gain in more than 13 months, as bond yields fell, with relieved investors buying back into Italian assets after Economy Minister Giovanni Tria vowed on Sunday to stay in the euro and cut debt levels.

The original list of ministers from discussions between the far-right League and the anti-establishment Five-Star Movement (M5S) coalition members - was rejected by Italian President Sergio Mattarella.

He added that Italy's new government would seek to block any market conditions that would "push toward an exit". "It's not just that we do not want to leave, we will act in such a way that the conditions do not get anywhere near to a position where they might challenge our presence in the euro". It also needs to find an estimated 12.5 billion euros ($14.8 billion) to stave off the threat of an automatic increase in sales taxes because of previously missed deficit targets.

Recalling that a deficit and high debt were present when Italy had its own national currency, Patuelli told the congress, "We must not kid ourselves and put all of the blame on Europe".

The previous center-left government had forecast a fall in debt to 130.8 percent of gross domestic product this year and 128 percent next year against 131.8 percent in 2017.

He also distanced himself from calls within the coalition for the government to issue securities to pay off individuals and companies owed money by the state.

"Stop-gap solutions solve nothing", he said.

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