Forexpros – Italy saw borrowing costs climb to the highest level since December at an auction of six-month government bonds on Wednesday, as market participants remained cautious ahead of a European Union summit on Thursday and Friday.
Italy’s Treasury sold the full targeted amount of EUR9.00 billion worth of six-month government bonds maturing in November 2012 at an average yield of 2.957% earlier in the day, the highest since December and up from 2.104% at a similar auction last month.
Demand was steady, with bids exceeding supply 1.615 times versus a “bid-to-cover” ratio of 1.61 in May.
The yield on Italian 10-year bonds stood at 6.13% following the auction, down from 6.18% hit Tuesday.
Bond auctions have become key drivers of risk sentiment in recent months, as traders attempt to gauge the ability of indebted euro zone nations to fund themselves.
Meanwhile, the euro remained lower against the U.S. dollar, with EUR/USD easing down 0.07% to trade at 1.2486.
European stock markets remained broadly higher. Italy FTSE MIB Index added 0.4%, the EURO STOXX 50 rose 0.1%, France’s CAC 40 advanced 0.15%, Germany’s DAX eased up 0.1%, while London’s FTSE 100 was flat.
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