Signs Italy may avoid poll calms markets

Financial markets have calmed amid increasing signs that Italy may avoid imminent elections after the president gave two populist parties time to agree on an alternative to an anti-euro economy minister.

A day after the possibility of a governing coalition between the antiestablishment Five Star Movement and the rightwing League was revived, League leader Matteo Salvini cancelled appointments in northern Italy to travel to Rome.

The two parties together won a narrow majority in elections on 4 March.

They presented their proposed cabinet over the weekend, but president Sergio Mattarella vetoed their economy minister, collapsing the deal.

Five Star proposed moving contested ministerial candidate Paolo Savona to a different cabinet post.

Many worried that new polls would be a de facto referendum on Italy’s membership of the euro. Markets reacted with relief to the prospect of a political government.