Italy's coalition sticks together for now, but Luigi Di Maio faces confidence vote

Italian Deputy Prime Minister Matteo Salvini on Thursday ruled out early elections, dismissing talk that he would capitalize on a triumph in European parliamentary elections to seek a power grab for his right-wing League party.

At Sunday's European vote, the League trounced its coalition partner, the anti-establishment Five-Star Movement, fuelling speculation Salvini might ditch Five-Star and seek fresh elections at the head of a bloc of smaller conservative parties.

Speaking to reporters in parliament, Salvini forcefully denied the reports.

"There will be no early election. In September we will be preparing the budget," he said. "If I wanted to bring down the government, I wouldn't spend night and day putting together policy proposals ... there are so many things to do, I don't want an early election."

Salvini has been behaving since the European election as if he were already prime minister, promising tax cuts and calling for changes to European Union budget rules, while Five-Star licks its wounds and tries to resolve a leadership crisis.

Salvini's strategy appears to be to dictate the policy agenda while insisting the government should continue, knowing that if Five-Star bows to his demands,it would risklosing more support among its core voters.

If it does not, that might trigger a coalition collapse and fresh elections which would be likely to reward Salvini.

While Salvini basks in his election success, Five-Star members were voting on Thursday to decide the fate of party leader Luigi Di Maio, who said he needed to know if the party wanted him to carry on after Sunday's debacle.

The vote is being held on Five-Star's dedicated online platform, with the result expected to be announced Thursday night.

League lawmaker forced to resign

Turning to the economy, Salvini said the government will respond "politely" to Brussels's concerns over its public finances by citing data that will avoid any disciplinary steps.

"The economy is showing signs of picking up," he said, addingtax revenues are higher than were expected.

Rome must respond by Friday to a European Commission letter asking for explanations for its rising budget deficit and debt.

Economy Minister Giovanni Tria, who formally has the task of replying to Brussels, told reporters in the northern city of Trento that the missed targets were due to an economic slowdown and public accounts would be back on track next year.

He said Italy would adopt no additional cuts in 2019.

In another sign that he is in no rush to sink the government, Salvini on Thursday sacrificed a junior League minister who was convicted of embezzlement, defusing a potential flashpoint with Five-Star.

Several League officials had rejected calls from Five-Star for deputy transport minister Edoardo Rixi to step down if convicted, setting the scene for another clash between the quarrelsome ruling parties.

Salvini said Rixi had offered to go, and he had accepted his resignation "to protect him and the activity of the government from senseless attacks and polemics."