The markets breathe easier while the government of Italy swears



ROME (Reuters) – Italy's new anti-establishment government was settling in on Friday, calming scared markets over the possibility of sudden elections that could have become a de facto referendum to abandon the euro.

Italy's appointed Prime Minister Giuseppe Conte and Italian President Sergio Mattarella sign documents at the Quirinal Palace in Rome, Italy, on May 31, 2018. Italian Presidential Press Office / Brochure through REUTERS

President Sergio Mattarella was to swear Prime Minister Giuseppe Conte, a little known law professor, and a cabinet that includes the two party coalition heads, Mateo Salvini of the League and Luigi Di Maio of the 5-star Movement.

Ironically, after taking office at the Quirinale Palace, the politicians who last week called Mattarella's accusation will mingle with him at a reception in his manicured Renaissance gardens to commemorate the Fiesta de la República.

The 5-Star Movement had called for protests against Mattarella at the party, marked by a parade on Saturday that is supposed to celebrate national unity, after he vetoed his election of Finance Minister Paolo Savona, a man of 81 years eurosceptic economist.

After the government was formed, however, the 5-Star began to refer to the meetings as "street parties."

After months of uncertainty in the eurozone's third-largest economy, Italy's blue-chip equities rose more than 2 percent, as banks recovered from a loss and bond yields government declined sharply in the first operations.

On Tuesday, when a quick election seemed very likely, a wave of Italian debt sales caused the biggest one-day increase in yields on two-year bonds since 1992.

(For a chart on & # 39; 2 years of Italy bond yield & # 39; click reut.rs/2Jm6oAc)

Normal Italians were relieved by the end of the political stalemate, but wanted to take action to solve their daily problems.

"They need to be more quiet and do more, I'm talking too much, as I'm talking now," said Rome pensioner Lino Cozzalini. "At the end of the day, what is resolved?"

THE POWERFUL DUO CAN PULLOVE STRINGS

Salvini, head of the extreme right, the anti-immigrant League, and Di Maio, who leads the 5-Star, a grbadroots movement created by comedian Beppe Grillo who had never been before in the government, both will become deputy prime ministers.

Salvini will also be Minister of the Interior, with authority over immigration, and Di Maio obtains the Labor and Industry portfolio.

These powerful combinations raise the question of how much power will remain for Conte, who never ran for office and whom most Italians had never heard of before.

"The populists take the government," was the headline in the left-leaning newspaper La Repubblica, and added in a comment that many of the cabinet members had right-wing views on a number of issues.

The coalition program has not changed since it was presented in the first attempt to form a government last week.

There is no specific reference to abandoning the euro, but it includes a vague possibility that the state issues "mini-BOT", values ​​to pay people or companies for services or tax rebates, something critics say is a currency parallel that could pave the way out of the EU currency system.

Savona, who had been elected prime minister of finance, will instead be Minister for European Affairs, a less powerful role, but one that will allow her to negotiate with Brussels and talk about EU affairs.

Italy has debts that account for more than 130 percent of its economic output, the second in the euro zone after Greece, and is often described as "too big to fail", which means that the euro zone simply does not he can afford to rescue his third member.

The coalition manifesto says it will push the European Union to revise the bloc's rules that limit public spending, which Salvini has "enslaved" the Italians.

The new party economy minister, another little-known figure, economics professor Giovanni Tria, has criticized the EU's economic governance, but unlike Savona, he has not advocated a "plan B" for possibly leave the euro.

Additional reporting by Giselda Vagnoni, Eleanor Biles, Steve Scherer and Gavin Jones in Rome and Steve Jewkes in Milan; Edition by Robin Pomeroy

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