UPDATE 1-Italy's Bagnai says no reason to change structure of 2019 budget

The spending plans of Italy's new populist government have prompted foreign investors to cut their holdings of Italian state bonds by 69 billion euros since May.

There is no reason to change the structure of Italy's 2019 budget law, the head of the Italian senate's finance committee said on Tuesday.

Italian bonds rallied on Monday after reports that Italy's ruling coalition was bowing to pressure from the European Union and may reduce next year's budget deficit target.

"Our country, regardless of what it wants to do, is headed by a government that has political views which are different from those of the (European) Commission and the Commission is trying to fight it," economist Aberto Bagnai told state radio.

"This attitude is derailing the whole European project. There are neither political nor economic reasons to modify the structure of the budget," said Bagnai, who described the euro currency as an "economic monster" in a book he wrote in 2012.

The spending plans of Italy's new populist government have prompted foreign investors to cut their holdings of Italian state bonds by 69 billion euros since May.

Bagnai said he did not see any investor flight from Italian bonds.

"I see several attempts by European institutions, which should be doing the exact opposite, seeking to spread panic over the state of the Italian economy - without succeeding because the Italian economy is solid." 

(With inputs from agencies.)