Investing.com - Italian bank stocks were among the strongest performers in European midday trade on Monday, boosted by signs of a breakthrough in the long running row between Rome and Brussels over Italy’s 2019 budget.
Deputy Prime Minister Matteo Salvini indicated that his government could lower its borrowing targets to avoid a disciplinary procedure from Brussels.
The European Commission had previously rejected Rome's expansionary 2019 budget because it reverses a commitment to reduce borrowing made by the previous government.
The FTSE Italia All Share Banks index was up more than 5% in Milan by 6:40AM ET (1140GMT), its biggest daily gain since June.
Unicredit (MI:CRDI) and Intesa Sanpaolo (MI:ISP) were the top gainers, up 5.9% and 5.4% respectively, while Banco Bpm SpA (MI:BAMI), the country's third-largest bank, surged 5.2%.
Smaller lenders UBI Banca SpA (MI:UBI) and Bper Banca SpA (MI:EMII) were also higher, gaining nearly 6% apiece.
The strong gains in Italian banks lifted the broader European financial sector, with the pan-European Stoxx 600 Banks index rising about 2.5%.