Last week, markets soared on exit polls suggesting the centre-left coalition of Pier Bersani was ahead, and likely to be able to form the next Italian government.
The contest was a four-horse race between the centre-left coalition of Mr Bersani (the Common Good), the Civic Choice group led by technocrat Mario Monti, the Five Star movement led by professional comedian Beppe Grillo, and the centre-right movement – People of Freedom – led by Silvio Berlusconi (yes, him again). As a result of these polls, peripheral bonds jumped: Italian sovereigns tightened from 4.45% to 4.16% intraday. At one stage, the Italian equity market was also up 4%. The positive mood contributed to a broad risk-on rally, sending the broad European market up around 1.5%. T...
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