Milan bourse drops 1.22% amid rising spread

Uncertainty surrounding elections spooks investors

Milan bourse drops 1.22% amid rising spread

Rome, February 7 - The spread between 10-year Italian bonds and the German benchmark closed at 297 basis points on Thursday with a yield of 4.58%. Earlier in the day it touched the psychologically important 300-points mark, allegedly due to concerns about the political situation in the country after parliamentary elections on February 24 and 25. The spread is a key measure of Italy's borrowing costs and investor confidence in its ability to weather the eurozone crisis. The Milan stock exchange on Thursday closed down 1.22% with its main FTSE MIB index falling to 16,400 points. Energy company ENI share prices dropped 4.62% following revelations that CEO Paolo Scaroni had been placed under investigation in an international corruption probe involving alleged bribes for contracts for its subsidiary Saipem in Algeria. Shares in the oil contractor instead gained 5.26%. Shares in troubled lender Monte dei Paschi di Siena (MPS) also performed well, showing a 4.08% rise at the close of trading after CEO Fabrizio Viola said "there are no more Santorinis" in reference to the scandal concerning previously undeclared losses of 730 million euros taken by Italy's third-largest bank as a result of failed high-risk derivatives operations. Other European markets performed better, with Frankfurt closing up 0.13% and its main Dax index standing at 7,590.85 points and the Athens bourse rising by 0.67% with its general index coming in at 1,042.16 points. London, Paris and Madrid instead all lost value, with their respective Ftse 100, CAC 40 and Ibex 35 indices falling 1.06%, 1.15% and 0.52% to close at 6,228.42, 3,601.05 and 8.014,60 points respectively.

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