Italy'sgovernment and the European Commission are at an impasse in their discussionsabout how to prop up the country's struggling lenders such as ,Bloomberg News reported July 7, citing "people familiar with thediscussions."

Difficultiesin the talks are reportedly attributable to different interpretations of EU bank-resolutionrules. The Italian government claims that these enable it to support lenderswithout imposing losses on bondholders if capital shortages are flagged up inbank stress tests, Bloomberg said.

Italy'splans reportedly involve picking up any unsold shares or convertible bonds if abank that is under pressure decides to sell them.

TheItalian government and the EC are unlikely to reach an agreement before July29, the date when the results of the European bank stress test will probably berevealed, Bloomberg said.