updated 05/17/2011 AT 4:00 PM ET
•originally published 05/23/2011 AT 12:55 PM ET
The pair, who were spotted hugging on a yacht on the French Riviera during the festival last week, were seen again looking friendly in Portofino, Italy, on Sunday.
Lively, 23, and the newly single DiCaprio, 36 – both wearing hats and sunglasses – went sightseeing and “seemed happy in each other’s company,” according to an observer. They were “laughing and walking” together.