Forexpros – Italy saw borrowing costs rise at an auction of six-month government bonds on Tuesday, amid sustained concerns over the euro zone’s deepening debt crisis.
Italy’s Treasury sold the full targeted amount of EUR8.5 billion worth of six-month government bonds maturing in November 2012 at an average yield of 2.104% earlier in the day, up from 1.772% at a similar auction last month.
Demand was weaker, however, with bids exceeding supply 1.61 times versus a “bid-to-cover” ratio of 1.71 in April.
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.
The yield on Italian 10-year bonds eased to 5.70% following the auction, down from 5.79% hit Monday.
Meanwhile, the euro held on to gains against the U.S. dollar, with EUR/USD rising 0.14% to trade at 1.2559.
European stock markets remained mixed to higher. Italy FTSE MIB Index dipped 0.1%, the EURO STOXX 50 rose 0.25%, France’s CAC 40 added 0.5%, Germany’s DAX rose 0.75%, while London’s FTSE 100 eased up 0.25%.
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