Rome

Markets regain some footing on optimistic news from the ecb

Italian spread falls to 510 points

Markets regain some footing on optimistic news from the ecb

(ANSA) - Rome, July 25 - Italy's financial markets regained some footing and spreads with Germany's benchmark eased slightly by mid-day Wednesday. Investors were heartened by suggestions that the European Central Bank may decide to give some extra strength to the region's bailout fund, as policy makers struggle to contain the debt crisis. By early afternoon, the spread between Italy's 10-year bonds and the German Bund tightened to 510 basis points and the yield relaxed to 6.44% after ECB council member Ewald Nowotny told Bloomberg that there are arguments in favour of giving the European Stability Mechanism a banking license. That would give it access to ECB lending, easing concerns that the fund might not be big enough on its own to cope with Europe's debt crisis. The small recovery cheered investors who had watched with concern Tuesday as the Italian-Germany spread jumped to 537 points - a level not seen since last November, when Italy's ex-premier Silvio Berlusconi was driven from office. Meanwhile, the Milan stock exchange's benchmark FTSE Mib index was very volatile Wednesday morning but still managed to gain 1.5% in early trading to reach 12,551.22, after suffering some of the heaviest losses in the region on Tuesday. The index hit an euro-era low on Tuesday amid concerns Spain may need a bailout and closed the day 2.71% lower.

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