@joel see attached screenshot (from main_page.php, with $g_news_enabled = ON) for illustration of what this issue is about.

main_no_markdown.png (2,369 bytes)   

main_no_markdown.png (2,369 bytes)   

main_with_markdown.png (2,581 bytes)   

main_with_markdown.png (2,581 bytes)   

Thanks @dregad, I think its because headlines is being process with the text Mantis Core Formatting plugin, since Markdown is part of it.

 $t_headline = string_display_links( $p_headline );

solution: (remove the string_display_links helper)

$t_headline =  $p_headline;

We can do it by tweaking the css as well without altering the code.

#news-items p { margin: 0 0 10px; all: inherit; }

Ok, here is the PR for this issue https://github.com/mantisbt/mantisbt/pull/1003