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Italian 5-star Movement leader DiMaio says government is nearly complete

Italian 5-star Movement leader DiMaio says government is nearly complete

As Italy moves closer to the formation of a government between the anti-establishment 5-Star Movement (M5S) and Lega (League), a leak to Huffington Post of a 40-page policy contract between the two Eurosceptic parties that details their roadmap rattled worldwide markets on Wednesday.

"We have made a lot of good progress. we should finish the program today", Salvini said during a live video stream on Facebook.

Mr. Mattarella said this month that if political leaders can't form a coalition, he will appoint a nonpartisan figure to lead a caretaker government and hold new elections by the end of the year.

"It would be insane to give up at the moment of truth", he said, adding that he would not be intimidated by negative reaction from financial markets or attacks from the media against the two anti-system parties. "I think investors are recognising we are at the beginning of the beginning of this, so it's not anything to make dramatic portfolio moves or any significant bets on", said Katie Nixon, chief investment officer for the wealth management division of Northern Trust in Chicago.

As the likelihood of a populist government in Italy increases, the yield on Italian government bonds - a measure of investor confidence in the country - has climbed. Italy is the euro zone's third-largest economy.

Wednesday's yield increase followed Tuesday's bond market selloff spurred by data showing a solid rise in retail sales that suggested the USA economy is on a stronger footing in the second quarter.

Italy's debt is already the second-largest among European Union countries, at 130 percent of GDP, and the European Union has been calling on the country to continue putting its finances in order.

The League has promised to introduce a flat tax rate of 15%, which would tax revenues by some 80 billion euros (RM376 billion) per year, while 5-Star has pledged new welfare payments for the poor costed at around 17 billion euros (RM80 billion).

Speaking to reporters in parliament, Salvini said the policy agenda the two parties have been working on for a week was "almost finished", and he and 5-Star leader Luigi Di Maio would meet with President Sergio Mattarella "even before Monday".

Brussels has called on the next Italian government, which is likely to be formed by Eurosceptic parties, to remain on the "European path" and not tear up the EU's strategy for controlling migration.

Turning to other issues that have snarled Rome's relations with Europe, the draft calls for asylum seekers who arrive in Italy to be relocated automatically across the European Union.

Al Jazeera's Laurence Lee reports from Rome on who would be the winners and losers from Italy's radical new direction.

World and European shares did creep higher [.EU] but other two big macro market spotlights stayed on Italy and Turkey. He declined to comment on the outcome of the coalition talks.

Both groups have a history of euroscepticism.

"It's very possible that the parties will have to moderate their plans on a lot of these controversial areas once they try to govern", said Flavio Chiapponi, a political scientist at the University of Pavia and author of a book about the 5-Star Movement.

"While the situation in Italy is a concern for currencies, the 5-Star Movement sees Britain struggle with its European Union exit plan and is unlikely to pursue a similar agenda".