Italy's March 4 election ended in stalemate, with parties now grappling to form a coalition government.

"The market has already priced in a certain level of risk so there is a scope for slight outperformance of (Italian) BTPs versus other European government bonds," said Francesco Martorana, who is the head of investments at Generali Investments.

Generali Investments is the main asset management arm of Generali, Europe's third largest insurer.

He told Reuters that while the election results presented some uncertainty, he was confident on the outlook for Italian bonds.

The premium investors demand to hold Italian 10-year government bonds over top-rated Germany has held relatively low levels around 137 bps.