Markets up after good Italian bond sale, but spread widens

Treasury sells 5.5 million in BTPs at lower rate

Markets up after good Italian bond sale, but spread widens

(ANSA) - Rome, July 30 - The Milan bourse was the strongest European performer and Italy enjoyed positive results on a key bond sale, but pressure on the bond market crept up on Monday. The Treasury sold almost all of its maximum target of 5.5 million euros worth of BTPs at a lower rate than the last equivalent sale. The Treasury said it sold 5.48 billion worth of bonds in total, and that the interest rate on the 10-year BTPs was down to 5.96%, compared to 6.19% at an auction at the end of June. The interest rate on the five-year BTPs it sold went down to 5.29% from 5.84 last month. But pressure on Italy's bonds rose in trading on the day when the spread between 10-year BTPs and the German benchmark widened to 465 points. The yield spread, an important indicator of the markets' faith in Italy's ability to weather the eurozone crisis, closed at 6.03%. Despite pressure on the money markets, Milan's stock market closed up for the fourth day in a row, gaining 2.8% to close at 13,978 points. Markets were up across Europe. Frankfurt's DAX index gained 1.27% to close at 6,774.06 points. Paris's CAC 40 earned 1.24% and closed at 3,320.71. London's FTSE 100 earned 1.18%, closing at 5,693.63. Investors were cheered after receiving more positive signals about the European Union's determination to solve the eurozone crisis following European Central Bank President Mario Draghi's statement on Thursday that his body would do everything necessary to save the single currency. Italian Premier Mario Monti and German Chancellor Angela Merkel said on Sunday they were ready to take all necessary measures to protect the single currency and Eurogroup President Jean-Claude Juncker said all the members of the eurozone were prepared to buy the bonds of countries facing soaring borrowing costs. Earlier last week, fears that the eurozone crisis was deteriorating and that Spain would need a bailout drove the spread up to 537 points, a level not seen since last November, when Italy's ex-premier Silvio Berlusconi was driven from office.

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