(Bloomberg) -- Italian bonds fell on concern that Finance Minister Giovanni Tria, whose appointment brought a relative calm to the nation’s markets, may be forced to step down.

Short-end Italian bonds, which have borne most of the brunt of recent political uncertainty, led the declines after La Repubblica reported that the country’s populist leaders were united in battle against Tria over nominations for the leadership of state lender CDP. Five Star Movement leader Luigi Di Maio and League chief Matteo Salvini were said to have gone so far as to “threaten unofficially to use the weapon of seeking Giovanni Tria’s resignation.”

“The conflict is not new news, but the prospect of Tria leaving the government is not a positive for BTPs and confidence in the new government,” said Antoine Bouvet, a strategist at Mizuho International Plc. “He was very much the appointment aimed at calming markets earlier this year.”

The yield on the nation’s two-year bonds climbed eight basis points to 0.63 percent, while those on 10-year notes increased six basis points to 2.57 percent. The 10-year yield spread over Germany widened seven basis points to 225 basis points, the highest level in a week.

To contact the reporter on this story: John Ainger in London at jainger@bloomberg.net

To contact the editor responsible for this story: Ven Ram at vram1@bloomberg.net

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