LONDON (Reuters) – European shares rose and Italian bonds rallied on Wednesday as some of the worries that have rippled across markets this week were soothed by signs Rome was amenable to cutting budget deficits and debt in coming years. While the euro ceded some earlier gains against the dollar to trade flat on the day, the positive sentiment rippled across the Atlantic where Wall Street looks set for a stronger session. Markets were lifted on Wednesday by a report in the Milan daily Corriere della Serra – later confirmed to Reuters by an Italian government source – that said the deficit would fall to 2.2 percent of gross domestic product in 2020 and to 2 percent in 2021, from the 2.4 percent earlier outlined. That relieves some fears that Italy’s decision to expand budget deficits well beyond what was agreed by a previous government would deepen its debt problems and stoke conflict with the European Union. “That the Italian government is trying to appease its EU partners can be seen as a step in the right direction and therefore justifies some euro-positive reaction,” Thu Lan Nguyen, a FX strategist at Commerzbank, said. While U.S. President Donald Trump agreed a new trade pact with Mexico and Canada, a disputed clause in the trilateral agreement, forbidding similar deals with “non-market” countries, was seen as raising risks for Sino-U.S. talks.