Italy's parliament approves a budget for 2019, amid complaints it was revised to placate the EU.Read more
Five Star Movement
It's been a bumpy day for Italian bonds.
The yield on Italian 10-year government debt jumped to 3.2572% - from Thursday's closing figure of 2.8848%.
That yield figure is used as benchmark for the cost of borrowing for the Italian government.
On Thursday the ruling Five Star and League parties agreed to set the budget deficit at 2.4% of GDP, a much higher figure than previously expected.
The budget will fund an expansion of welfare spending, tax cuts and investment in infrastructure.
"It is a budget which appears to be beyond the limits of our shared rules," said Pierre Moscovici (pictured), who runs the European Commission's economic and finance portfolio.
"If you allow public debt to increase you create a situation that becomes unstable as soon as the economic context worsens," he added.
More on Italy.
Reuters is reporting that its Economy Minister Giovanni Tria has threatened to resign in a row over government spending.
Mr Tria want to keep the public deficit to GDP figure at 1.6% however the ruling populist coalition is pressing for higher spending to make good on election promises.
The figure is part of Italy's budget target which it must present to the European Union which has set a deficit to GDP threshold of 3%.
As Italy's populist fledgling coalition government prepares to meet this afternoon to agree budget targets, the former head of the Eurogroup finance ministers said it is up to parliament not the financial markets to save the country.
Jeroen Dijsselbloem tells CNBC: "To be quite honest, the Italian government will have to save Italy, the markets won't do it, Europe won't do it. Italians need to address their own issues."
The former Eurogroup president was speaking during a volatile day of trading for Italian bonds amid reports of infighting about the budget targets - the most contentious of which is the public debt to GDP ratio figure.
Reports suggest the far-right League has sided with coalition partner 5-Star in pushing for higher spending, in contrast with Economy Minister Giovanni Tria who wants to keep it under control.
Mr Dijsselbloem says: "All this infighting of the populist coalition — they are simply losing time and that is a scarce commodity in Italy."
The euro is trading lower against the dollar and the yen as Italy's coalition government prepares to outline its first budget targets - potentially putting it on a collision course with the European Union.
The single currency is down 0.28% on the greenback at $1.1708 and is lower on the yen at ¥131.8550.
Coalition parties Five Star Movement and the far-right League want to uphold their populist promises they got them elected but may be hampered by the 3% public deficit to gross domestic product ratio imposed by the EU.
Five Star leader and deputy prime minister Luigi Di Maio (pictured) has said it could do no harm to go over the EU's 3% threshold.