Milan, other European stock markets slide

Strong bond sales helps to narrow spread with Germany

Milan, other European stock markets slide

Milan, April 17 - Despite a strong bond sale that showed investors' confidence in the Italian economy, the country's major financial exchange lost ground on Wednesday. On the Milan Stock Exchange, the FTSE-Mib fell by 0.96% to close trading at 15,383 points. Other European markets also lost ground amid continuing concerns about global growth - particularly, after the International Monetary Fund (IMF) lowered its growth forecasts. Still, investors showed some confidence in the Italian economy, helping to narrow the spread between Italian and German debt. The spread shrank to 302 basis points at close of trading Wednesday, down slightly from Tuesday's closing spread of 305 basis points. The yield on 10-year Treasury bonds closed at 4.24%. Earlier in the day, the spread fell to just 297 points, despite a successful German bond auction that saw the rate on its 10-year bonds fall to a record low of 1.28%. The yield on Italy's 10-year paper also slipped to 4.23% at midday, the lowest level seen since February 25 when the Italian general-election results started coming in. The spread between lending rates in the two countries is seen as an indication of investor faith in the Italian economy and its ability to cope with a lingering recession. Investors in Italian debt had sent a strong signal of confidence in its economy on Tuesday when, for the second day in a row, they snapped up an entire offer of special bonds worth some eight billion euros. On Monday, the entire offer of nine billion euros was subscribed, leaving the two-day total for the sale - whose deadline was brought forward one day amid booming demand - at 17 billion euros. Meanwhile, concerns about the global growth outlook could be seen across indices. Frankfurt's DAX plunged by 2.34% to reach 7,503.03 points, while Paris's CAC 40 fell by 2.35% to close at 3,599.23 points, and London's FTSE 100 ended the trading day 0.96% lower, closing at 6,244.21. Spain's IBEX 35 also took a dramatic hit on the day, losing 1.83% to close at 7,803 points.

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