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UPDATE 2-Atlantia hit by concerns over Italy motorway concession

Valentina Za

* Govt passed measures to make it easier to end concessions early

* 5-Star leader says Atlantia concession to be revoked

* Issue fuels tensions within ruling coalition (Updates shares, adds bond reaction)

MILAN, Jan 2 (Reuters) - Doubts over Atlantia's lucrative motorway concession intensified on Thursday, hurting the Italian infrastructure group's shares and bonds after the leader of the ruling 5-Star Movement added to signs the licence could be revoked.

Controlled by Italy's Benetton family and in charge of the country's biggest motorway network, Atlantia has been in the crosshairs since a concrete bridge it operated collapsed in the city of Genoa in August 2018, killing 43 people.

A government decree came into force on Tuesday limiting compensation owed for the early termination of a concession agreement if the holder failed to meet contractual obligations.

Five-Star leader Luigi Di Maio on Wednesday said the measures would allow the government to strip Atlantia's motorway business Autostrade per l'Italia of its concession.

"The decree kicks off a process for some of the country's infrastructure ... which will allow us to revoke the Benettons' concessions," Di Maio said in a video posted on Facebook.

"I'm not comfortable having these people who failed to maintain (Genoa's) Morandi bridge running 3,000 km of Italian motorways where families travel every day. We need to take back management (of the network)."

Atlantia has denied any wrongdoing and said it carried out maintenance of the bridge as required by the contract.

Shares in the company closed down 3% against a 1.4% rise for Italy's blue-chip index.

An Atlantia bond due in June 2024 lost more than 2 percentage points in price while a February 2025 bond slid 1.8 points, according to Refinitiv data.

A source close to Autostrade last month said the loss of the concession without compensation could trigger a default on 16 billion euros ($17.9 billion) of debt at the company and parent Atlantia.

Adding to Atlantia's woes, parts of the roof to a highway tunnel operated by Autostrade collapsed near Genoa this week, prompting the transport ministry to call an emergency meeting and freeze tariff hikes on 95% of the country's highway network.

Autostrade was asked to speed up checks on Italy's outdated motorway network and update the ministry on its progress every 10 days.

Italy's cabinet is expected to discuss Atlantia's motorway concession in one of the first meetings of the new year.

The ruling coalition's PD party has been more cautious on the issue than 5-Star, adding to tensions between the partners in government.

"Autostrade is one of the mines we need to defuse ... it'd be wrong for the coalition to split up on such an important and delicate matter," PD's junior infrastructure minister, Salvatore Margiotta, was quoted as saying on Thursday. ($1 = 0.8956 euros) (Additional reporting by Gianluca Semeraro Editing by Jan Harvey, David Goodman and Emelia Sithole-Matarise)