Italian assets face heavier losses than peers on concerns over fiscal discipline

Global markets cautious as investors weigh EU election results

European stocks and Wall Street futures inched higher, with investors weighing continuing uncertainty over the Sino-us trade and technology dispute and the implications of European election results.

The broad Stoxx 600 index in Europe rose 0.1 per cent having flicked between gains and losses earlier in the day, while the FTSE 100 rose 0.4 per cent in its first session of trading this week. S&P 500 futures turned around to point to a rise of 0.1 per cent at the opening bell in New York.

Italian assets were under pressure after a victory for the rightwing League party in the European elections, which investors said could embolden its leader and deputy prime

minister Matteo Salvini to step up a budget battle with the EU, or push for early elections. The FTSE MIB index fell 0.5 per cent, while the benchmark 10-year bond yield rose 5 basis points to 2.706 per cent.

The premium investors demand to hold Italian debt over Germany’s widened as German Bund yields hit fresh two-anda- half- year lows. The spread between Italian 10-year government bonds and German Bunds of the same maturity rose to 2.857 per cent. If it closes at those levels it will be the widest spread since February.

Elsewhere in Europe, auto stocks built on Monday’s gains after Fiat Chrysler confirmed it had proposed a €33bn all-share merger with Renault. The index tracking Europe’s automotive industry was up 1.2 per cent.

China-focused stocks overcame a slow start, with the CSI 300 and Hang Seng indices rising 1 per cent and 0.2 per cent, respectively.

The boost came after data showed that profits for China’s industrial firms shrank in April, raising hopes of further stimulus, and ahead of a planned weighting increase of Chinese stocks by index provider MSCI after the close of trading on Tuesday.

Japan’s Topix was up 0.3 per cent after slipping into negative territory earlier in the session. Carmakers Mitsubishi and Nissan rose 6 per cent and 2.3 per cent respectively after Renault, their alliance partner, announced plans for a merger with Fiat Chrysler on Monday.

Brent crude hovered either side of the $70 a barrel a mark through the day.