Italian debt soars on EU bail-out fears
Fears over the ability of the eurozone bail-out to protect the region’s embattled members have been heightened after Italy was forced to pay the highest price to issue debt since the launch of the euro.
By Jonathan Sibun
28 Oct 2011
taly sold €8bn (£7bn) of 10-year bonds at 6.06pc, a level seen as unsustainable by analysts, in the first major test of market appetite since European leaders agreed steps to tackle the crisis.
Italian leader Silvio Berlusconi is seen as critically weakened and there are doubts he will be able to push through the austerity measures demanded by markets.
“[Italy] is still the bête noire of the whole eurozone problem,” said Monument Securities strategist Marc Oswald.
In comments that appeared unlikely to calm concerns, Mr Berlusconi issued an extraordinary outburst against the single currency, blaming it for the scrutiny on Italy’s finances. He described the euro as a “strange currency” that “has convinced nobody” and claimed that after Germany, Italy had the eurozone’s strongest economy.
The outburst came just hours after Klaus Regling, chief executive of the European Financial Stability Facility (EFSF), arrived in Beijing to try to persuade China to help finance the eurozone’s bail-out vehicle. China has said there will be no “charity” and Mr Regling warned it would likely take “several weeks” to hammer out a deal.