MILAN, Feb 3 Reuters Italys borrowing costs fell sharply on Wednesday after former ECB president Mario Draghi accepted the task of trying to form a new government and said he was confident of securing sufficient backing in the Italian parliament.
After receiving a mandate from President Sergio Mattarella, Draghi said he hoped for unity from political forces as well as society at large. He said he would return to Mattarella to tell him of the outcome of his talks, though gave no time frame.
After weeks of political uncertainty, markets cheered the prospect of the trusted former central banker taking over at a time when Italy is grappling with a pandemic and its worst recession since the end of World War Two.
Draghi will face obstacles in forming a new government but I think he will succeed because Italian MPs do not want to go to new elections, said Althea Spinozzi, fixed income strategist at Saxo Bank. She did not expect new elections but said they were a possibility.
Italys 10year bond yield was last down 7.5 bps to 0.58 after touching its lowest level in two weeks at around 0.55.
The closelywatched gap between Italian and German 10year bond yields fell to 104 bps from 113 bps late Tuesday , the lowest level in two weeks.
German 10year bond yields were around 2 bp higher on the day at 0.469, hovering around the highest level in three weeks. German 30year bond yields rose to their highest since September at around 0.04.
Still, it was Italy that grabbed the…