Shares in Atlantia gained 2.8% at 0920 GMT, outperforming a 1.3% rise in Italy's blue-chip stock index.

"Positive news for Atlantia, as the decision of AISCAT clearly indicates that there is a high chance of reaching an agreement between ASPI and the government in the near term", Fidentiis said in a note.

However, the broker thought negotiations with the government could cost Atlantia around 4 euros ($4.42) per share in terms of sanctions and tariffs.

"We believe that the stock price is fully discounting the fact that the ASPI concession will not be revoked," it added.

Lobby group AISCAT, which includes Atlantia's motorway unit Autostrade per l'Italia, on Monday said it had decided to withdraw the claim because it was confident the dispute with the government would be resolved.

The decree, which is due to be approved in parliament by the end of February, curbs compensation for early termination of a contract when the concession holder is in breach of its obligations.

Prime Minister Giuseppe Conte is expected to meet senior members of his government on Wednesday to discuss the motorway concession rules.

The case has caused tensions in the ruling coalition, with the anti-establishment 5-Star Movement pressing to revoke Atlantia's concession and the centre-left Democratic Party fearing potentially a heavy compensation payout.

(Reporting by Cristina Carlevaro, editing by James MacKenzie and Louise Heavens)