Germany bond spread hits highest level since 2013 over European Union budget dispute

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However there is potential for the single currency to appreciate throughout the latter half of the week as focus turns to the European Central Bank's (ECB) latest rate decision, with investors hoping the ECB will detail its plans to wrap up its bond-buying programme by the end of 2018.

The head of one of Italy's two ruling parties says the government won't fall over a dispute on the budget draft, which would offer a tax amnesty to Italians with accounts overseas.

The European Commission complained that the latest Italian budget violates EU budget rules, with government spending and sovereign debt both increasing which would result in the Italian government's inability to reduce public debt in accord with EU regulations.

Conte said he would review the draft budget line by line when he returns to Rome.

The ongoing contention between the European Union and the Italian government was escalated after the European Commission wrote a letter to the Italian economy and finance minister Giovanni Tria about the Italian budget.

"I cannot imagine the euro without Italy and Italy without the euro, " Moscovici said after his meeting with Tria during which he delivered the letter. He did not think Italy's deviation from targets was large, and expected the Commission to send similar letters to Spain, France and Portugal.

On Wednesday Conte said he saw no room for changing tack and on Thursday described the budget as "beautiful".

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If it is not amended, the Commission could reject the draft by October 29 in what would be an unprecedented move that could further rattle financial markets.

Italy's government borrowing rose, with the yield on the benchmark 10-year bond on Friday hitting its highest level since 2013.

Italy's opposition to cyber sanctions has contributed to a softening of the wording of the final joint summit document which in its last draft version says work "should be taken forward" on cyber defenses "through European Union restrictive measures".

Far-right Interior Minister and Deputy Premier Matteo Salvini flew to Moscow on Wednesday to head an Italian business delegation at a trade meeting, launching a fresh attack on the European Union over its economic sanctions against Russian Federation.

While 5 Star has always opposed amnesties, the right-wing League, with its traditional voter-base of self-employed businessmen, is more favourable.

Italy's fiscal targets, coupled with recent tensions within the five-month-old governing coalition over a tax amnesty proposal, have fueled skepticism about the viability of the government's policies and their impact on the economy.

Italy's prime minister on Thursday denied any division between the two parties in his governing coalition, after reports of a spat over tax revenues, and insisted Rome will move ahead with planned expansionary budgetary measures.