Italy PM calls 'important' news conference amid coalition squabbles, EU pressure

ROME (Reuters) - Italian Prime Minister Giuseppe Conte said he would have “important things to say” at a news conference set for later on Monday, amid squabbles in his ruling coalition and the threat of EU action over Italy's deteriorating state finances.

Several Italian newspapers said Conte, a former academic, would threaten to resign unless the two coalition parties - the right-wing League and the anti-establishment 5-Star Movement - agreed to settle their differences and get on with governing.

Conte's spokesman was not available to comment on the newspaper reports.

Conte announced on Facebook that he would hold a news conference at 1615 GMT and that it would also be broadcast on the social media platform so that Italians could follow it live. He gave no indication of what he would say.

Italian government bonds rallied after Conte's statement, with benchmark 10-year yields falling 6 basis points and short-dated bond yields down 8 basis points.

Relations between the League and 5-Star soured during the campaign for European parliamentary elections on May 26.

The anti-immigration League won 34.3% of the vote, trouncing its ally and fuelling speculation that it might ditch 5-Star and seek a snap election.

FISCAL DISCIPLINE

La Repubblica daily said Conte would make clear that he wants the coalition to accept European Union budget rules and has no intention of being subjected to an EU disciplinary procedure over public debt.

Since the EU election League leader Matteo Salvini has continued to promise swingeing tax cuts and dismiss EU calls for fiscal discipline.

The European Commission wrote to Italy last week asking for an explanation as to why public debt rose in 2018 instead of falling as required, setting the stage for a possible legal clash with the anti-austerity coalition.

Economy Minister Giovanni Tria said on Saturday Italy was not seeking a showdown with the Commission on the issue and that he was confident it could avert disciplinary steps from Brussels.

Conte, who is close to 5-Star, will ask Salvini and 5-Star chief Luigi Di Maio to say explicitly by the end of this week whether they want to continue their alliance, Il Fatto Quotidiano said.

Should they continue to squabble, President Sergio Mattarella will dissolve parliament in July and set a new election for September, Il Fatto and Corriere della Sera said.

This would give the new government enough time to draw up the 2020 budget in the following month.