(ANSA) - Milan, September 5 - The spread between Italian and German bond interest rates sank for the third day in a row Wednesday to close at 404 basis points on the eve of an anxiously awaited European Central Bank (ECB) policy meeting scheduled Thursday. Markets are looking to see whether the ECB formalizes a mechanism to buy bonds in the secondary market to lower the borrowing costs of countries at the centre of the eurozone crisis, such as Spain and Italy. The ECB has been drafting such a mechanism, and president Mario Draghi said Monday that it is not against the ECB's mandate to buy state bonds "of up to three years" on the secondary market of eurozone countries. Spanish bonds also benefited from market expectations. The spread between interest rates on the Spanish bonos and the German benchmark sank under 500 basis points to close at 498. The yield on ten year Spanish bonds was 6.45%. The yield on ten year Italian bonds closed at 5.51%. Meanwhile, European stock markets were cautious Wednesday. Milan's FTSE MIB showed the most movement, losing -0.62% to close at 15,128 points. Paris's CAC 40 (+0.20%), London's FTSE 100 (-0.25%), and Madrid's IBEX (+0.08%) barely budged.