Milan bourse drops, spread up

(ANSA) - Milan, October 8 - The Milan stock exchange's FTSE Mib index dropped 1.84% in early trading on Monday, taking it down to 19,973 points, while Italy's bond spread approached the the 300 basis-points mark. The turbulence comes after the European Commission sent the Italian government a letter expressing concern about Italy's budget plans and the intention to let the deficit to climb to 2.4% of GDP next year.
    Bank stocks were hit hardest on Monday, amid fears of lenders needing new capital increases. Carige, which is not in compliance with ECB rules, fell 5.09%, MPS's share price dropped 4.9%, taking it below two euros to 1,91 euro, while Banco BPM, one of the lenders most active in offloading NPLS, shed 4.6%. The spread between Italy's 10-year BTP bond and the German Bund climbed to 297 basis points. The yield on the BTP went up to 3.49%. The spread, an important measure of Italy's borrowing costs and a gauge of investor confidence, closed at 285 points on Friday.