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Italy stocks and euro fall, bonds rise after report govt to cut 2019 GDP forecast

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Italy stocks and euro fall, bonds rise after report govt to cut 2019 GDP forecast
FILE PHOTO: Buildings are seen in the Porta Nuova district in Milan, Italy, March 27, 2017. REUTERS/Stefano Rellandini   -   Copyright  Stefano Rellandini(Reuters)
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LONDON (Reuters) – Italian stocks and the euro hit session lows while bond yields rose on Thursday after a report the government will cut its economic growth forecast for 2019.

Reuters reported on Wednesday afternoon that Rome will this month likely cut its 2019 growth estimate to 0.3 percent or 0.4 percent and raise the budget deficit target to around 2.3 percent of gross domestic product.

The news was circulating for almost a day before the markets reacted.

The government’s current targets, set in December, project growth of 1.0 percent and a deficit at 2.04 percent of GDP, agreed after a long tussle with the European Commission.

Bloomberg reported on Thursday the government is preparing to cut its GDP forecast to 0.1 percent from 1 percent previously.

The stock market extended earlier losses and was down 0.5 percent at 0945 GMT, while the euro hit a day low of $1.122, down 0.1 percent after the report.

Italian 10-year bond yields rose three basis points following the report to 2.56 percent.

(Reporting by London markets team; writing by Josephine Mason)

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