Italian spread dips back under 300-points mark

Pressure on state paper easing

Italian spread dips back under 300-points mark

Rome, December 4 - The spread between 10-year Italian bonds and the German benchmark dipped back under the psychologically important 300-points mark in early trading on Tuesday. It dropped to 299 points with a yield of 4.40% in a sign that pressure on Italy's borrowing costs is easing. The spread - a key measure of market confidence in the country's ability to weather the eurozone crisis - went under the 300-points mark for the first time since March on Monday. At its lowest on Monday, it descended to 292 basis points before closing at 304 points. The announcement on Monday of a Greek government plan to buy back a big chunk of debt from private creditors, reassuring investors wary of "peripheral" eurozone sovereign debt, helped Italian bonds. Austerity measures and structural economic reforms carried out by Premier Mario Monti's emergency government have boosted investor faith in Italy after the country's borrowing costs looked in danger of becoming unsustainably high last year, when the crisis forced Silvio Berlusconi to quit as premier. Furthermore, Italy's borrowing costs have come down significantly since July when European Central Bank President Mario Draghi pledged to do whatever was necessary to support the euro. He followed those words with action in September, when the ECB established a bond-buying program for stressed countries.

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