Matteo Salvini, a deputy prime minister, leader of Italy's populist League Party, and perhaps the most powerful figure in the Italian government, sent the euro reeling and Italian bond yields surging Tuesday when he said his country is ready to break EU fiscal rules governing the size of its budget deficit.

Italy's benchmark FTSE MIB trimmed earlier gains to 0.5% from 1% earlier as a 10-year government bond yield moved higher.

Estimates released by the EU Commission earlier this month projected that Italy's budget would smash the EU's deficit guidelines after growth estimates were downgraded. This after the Italian government struck a deal with the EU late last year on a deficit projection that both sides felt would be palatable.