Forexpros – Italy saw borrowing costs drop sharply to the lowest level since May at an auction of 12-month government bonds on Thursday.
Italy’s Treasury sold the full targeted amount of EUR7.5 billion worth of 12-month government bonds at an average yield of 2.697% earlier in the day, the lowest since May and down sharply from 3.972% at a similar auction last month.
Demand weakened slightly, with bids exceeding supply 1.55 times versus a “bid-to-cover” ratio of 1.73 in June.
The yield on Italian 10-year bonds eased to 5.77% following the auction, down from 5.82% hit Wednesday.
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 held on to losses against the U.S. dollar, with EUR/USD shedding 0.17% to trade at 1.2221.
European stock markets remained broadly lower. Italy FTSE MIB Index fell 1.15%, the EURO STOXX 50 declined 0.65%, France’s CAC 40 slumped 0.45%, Germany’s DAX dropped 0.85%, while London’s FTSE 100 shed 0.8%.
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