Forexpros – Italy saw borrowing costs edge higher at an auction of two-year government bonds on Thursday, amid ongoing concerns over the handling of the euro zone’s debt crisis.
Italy’s Treasury sold EUR2.5 billion worth of two-year government bonds maturing in May 2014 at an average yield of 4.860% earlier in the day, up from 4.712% at a similar auction last month.
Demand strengthened slightly, with bids exceeding supply 1.78 times versus a “bid-to-cover” ratio of 1.65 in June.
Italy’s Treasury planned to sell between EUR1.5 billion and EUR2.5 billion of government bonds Thursday.
The yield on Italian 10-year bonds rose to 6.42% following the auction.
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 shedding 0.25% to trade at 1.2125.
European stock markets held on to losses. Italy FTSE MIB Index fell 0.3%, the EURO STOXX 50 dropped 0.45%, France’s CAC 40 declined 0.15%, Germany’s DAX slumped 1%, while London’s FTSE 100 shed 0.25%.
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