The borrowing costs of Italy jumped on Wednesday, while its stocks fell due a draft program for a potential coalition government comprising the anti-establishment 5-Star Movement and the far-right League that includes some controversial measures.
"It would be insane to give up at the moment of truth", League leader Matteo Salvini said in a live video stream on Facebook, adding that he would not be intimidated by negative reaction from financial markets or attacks from the media.
Salvini said the League wanted "strong government and a tax and security revolution", but admitted it remained "far apart" from M5S on several issues.
"It would be insane to give up at the moment of truth", he said, adding that he would not be intimidated by negative reaction from financial markets or attacks from the media against the two anti-system parties.
"First must come the things that need doing, and only afterwards (we need worry about) absurd rules written many years ago when the world was totally different", he said.
He was referring to the large numbers of migrants coming into Italy whom many in the country blame for crime. In recent days, Mr Salvini has been trying to push Mr Di Maio towards a more confrontational attitude with regard to Brussels on everything from the single currency to budget rules and migration policy.
Di Maio shrugged off such warnings as the protests of "Eurocrats that nobody elected", while on Wednesday Salvini, attacked European Union commissioner Dimitris Avramopolous' request that Italy's new government not change its policy on migration.
Populist Five Star Movement leader Luigi Di Maio and head of the nationalist League Matteo Salvini were discussing the deal at the Italian parliament after a summit in Rome on Wednesday evening that Salvini's spokesman Luca Morisi said was aimed at nailing down a "few issues". Italy is one of the eurozone's founding members and its third-biggest economy but the populist parties want to put Italians first and foremost in their government pact.
This will now be something to watch as populism is back on the agenda for markets where the coalition has radical ideas to free up billions of euros for tax cuts and welfare.
GETTYFive Star leader Luigi Di Maio claims a coalition deal is close
European Union leaders meeting in Sofia on Wednesday are likely to be concerned by the rhetoric of the parties which could form a new Italian government as early as next week.
Salvini and Di Maio have both agreed to drop their own ambitions to be prime minister and are looking for a candidate from outside their parties to enact their program.
Another commissioner, Dimitris Avramopoulos, was also quoted on Tuesday as weighing in on Italian politics, saying he hoped the new government maintained current immigration policies.
Italy has the second highest public debt in the eurozone.
Both groups have a history of euroscepticism.
"We will see what the outcome is and then we will comment", Juncker stated.
"While the situation in Italy is a concern for currencies, the 5-Star Movement sees Britain struggle with its European Union exit plan and is unlikely to pursue a similar agenda. It would very much put the new government on a Syriza-like trajectory within Europe", Mr Codogno wrote, referring to the leftwing ruling party in Greece.
5-Star and the League said in a statement that the draft, which was dated 14 May, was "an old version that has been considerably modified".