LONDON, Dec 12 (Reuters) – Italian government bond yields tumbled and the euro jumped on Wednesday, following a report that Italy is to propose a budget deficit target of 2 percent — well below the previous target of 2.4 percent.
The closely-watched gap between Italian and German 10-year bond yields narrowed to 272 basis points, its tightest since early October.
Italy’s two-year bond yields was last down 18 basis points on the day at 0.49 percent.
The euro extended gains to rise 0.4 percent on the day at $1.1365 after the news.
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