© Reuters. The Italian flag waves over the Quirinal Palace in RomeBy Philip Pullella and Giuseppe Fonte
ROME (Reuters) – Italy’s anti-establishment political leaders Matteo Salvini and Luigi Di Maio met on Thursday for last-ditch talks to resurrect a coalition government and avert a new snap election, the prospect of which has rattled global markets.
A source from Di Maio’s 5-Star Movement said there was hope of an agreement by Friday, but still no decision on a nominee for economy minister, a key post in any line-up.
There was no immediate indication from the League on the prospects of success.
President Sergio Mattarella torpedoed an initial attempt by the League and 5-Star to form a coalition, rejecting their candidate for the economy portfolio, 81-year-old economist Paolo Savona, a eurosceptic who has spoken out against the single currency.
Global financial markets have been recovering over the past two days after tumbling earlier this week over the prospect of a new Italian election dominated by debate over Italy’s future in the euro zone.
On Wednesday Di Maio made a last-ditch offer to resurrect the coalition bid, and Salvini said he would “seriously consider” it.
“You will have to be patient,” Salvini told reporters at Rome airport when asked about a possible solution to the crisis. He was whisked straight to parliament.
After rejecting Savona, Mattarella named former International Monetary Fund official Carlo Cottarelli to form a stop-gap government of experts to lead the country to elections. But Cottarelli has so far failed to form a viable cabinet.
Di Maio, whose 5-Star emerged from the inconclusive March 4 elections as the largest single party, urged Salvini to drop his insistence on Savona for the economy portfolio and agree to give him another post.
“Di Maio – Salvini: the Final Deal,” was the headline in Corriere della Sera newspaper, echoing the national feeling of crisis put into a holding pattern.
Salvini and Di Maio had agreed when they first tried to form a government that Giuseppe Conte, a little-known law professor, would be prime minister. That is not expected to change if the two sides reach another agreement.
Most opinion polls show Salvini’s League would see huge gains in any early elections while the 5-Star would remain steady or see some gains.
Italian stocks were trading higher and its borrowing costs edged lower as signs emerged of a compromise to avoid the snap election. Italy’s 2-year government bond yield, which has been the focus of a recent selloff, was down as much as 95 basis points at 1.40 percent ().
The latest development came amid a general calming of financial markets after Tuesday’s rout, when investor concerns prompted the biggest one-day rise since 1992 in Italian two-year bond yields and dented the euro’s exchange rate.
“I have lost my patience. I have had enough, that is the truth,” said exasperated Rome resident Teresa Gallo as she was walking to a market for her regular morning shopping.
Two polls released on Wednesday night showed that around two thirds of Italians want the country to remain part of the euro while around a quarter would choose to drop the common currency.
Lupo Rattazzi, a prominent Italian businessman, ran a full-page advertisement in several national newspapers addressed to Salvini and Di Maio, warning the electorate of the dire consequences of leaving the euro.
Source: Investing.com
