LONDON (Reuters) - Italian stocks jumped on Monday on accumulating signs of a climbdown from the Italian government whose budget deficit plans had set it on course for disciplinary action from the European Union.
The governing coalition is discussing reducing next year's budget deficit target to as low as 2 percent of gross domestic product from the draft budget target of 2.4 percent of GDP, a government source said on Monday.
The pan-European STOXX 600 climbed 1.1 percent, leading euro zone stocks <.STOXX50E> jumped 1.3 percent, and Italy's FTSE MIB <.FTMIB> led the way by far with a 3-percent gain.
Italy's banks index <.FTIT8300> jumped 5.3 percent, on track for its strongest day since June.
Outside politics, dealmaking drove the biggest moves.
Dutch marine engineer Boskalis
Boskalis would act in a consortium with Lamprell
(Reporting by Helen Reid; Editing by Josephine Mason)