Italy short-term debt costs halve

Italian debt costs have halved at its latest auction of short-term government bonds.

Traders said that was thanks to an emergency austerity budget pushed through by the new technocrat government and an injection of cheap long-term money from the European Central Bank.

But they warned Rome will have more trouble finding buyers for its longer-term bonds, 8.5 billion euros worth of which go on sale on Thursday, including three- and ten-year paper.

Italy paid an average rate of 3.25 percent to sell 9 billion euros of six-month BOT bills, down from a euro lifetime record of 6.50 percent just a month earlier. It also sold 1.7 billion euros of 24-month, zero-coupon bonds at a yield of 4.85 percent, down from 7.8 percent a month ago.

The lowest six-month auction yield and strongest bid-to-cover ratio since September added to a sense that some of the tension around the countries now at the centre of Europe’s debt problems had eased for a moment.

European stocks rose and the euro edged up in response.

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