(Reuters) - The Italian government is vying options to counter UniCredit's takeover bid for smaller rival Banco BPM, including an emergency decree, the Financial Times reported on Friday, citing two people with knowledge of the plans.

On Monday UniCredit unveiled an unsolicited 10 billion euro ($10.6 billion) takeover offer for BPM, which the target bank has since rejected. It said the premium offered was unusual and that the bid created problems for its acquisition of fund manager Anima Holding.

UniCredit's bid for BPM also throws a spanner in the works for Italy's government, which had advanced plans for a merger of BPM with rival Monte dei Paschi di Siena which it saw as strengthening its banking sector without harming competition.

Italy's Economy Minister on Tuesday said that Italy reserved the right to use its golden power legislation aimed at shielding strategic assets in regards to UniCredit's surprise move, "communicated but not agreed with the government".

Among the options the government led by Prime Minister Giorgia Meloni is considering is an emergency decree which would allow Banco BPM to avoid the so-called passivity rule, the FT report added.

The rule stops managers of a takeover target from doing anything that could thwart the bid without calling a shareholder meeting to win approval.

This prevents Banco BPM from raising the price of its bid for Anima and increasing its stake in Monte dei Paschi.