Italian BTPs have led periphery EGBs....>

EGB SUMMARY: Italian BTPs have led periphery EGBs spreads wider versus Bunds

amid renewed political concerns.

- BTPs sold off sharply early on rumours that Deputy PMs Salvini and Di Maio

asked Fin Min Tria to to resign, and further eurosceptic rumblings from lower

house`s Borghi. While Italian yields came back after Di Maio and the Finance

Ministry reportedly denied the rumours, they remain near highs.

- 2-Yr BTP yields up 10.6bps at 0.651%; 10-Yr up 6.7bps at 2.573%, amid wide

bid-asks. Spreads vs Bunds wider by 10.8bps for 2s and 7.0bps for 10s.

- Little contagion in the periphery from the Italy news, but Spain, Portugal and

Greece 10-Yrs all 0.5-1.0bps wider to Bunds.

- Bunds are largely flat since an initial Italy-led spike. Sep8 future is up 5

ticks at 163.13, 26 ticks down from the 163.39 high.

- Little Euribor futures strip movement, some contracts down 0.5 ticks.

- Greater clarity over the near certain year-end termination of asset purchases

will be the likely outcome of the ECB July 26 GC meeting, sources familiar with

the agenda have told MNI (see Main Wire at 1140BST).