05-31-2018, 12:02 AM
Amid political uncertainty investors demanded a higher return to take on Italian debt and the yield on 10-year government bonds rose to 3%, the highest level since 2014. However, there was healthy demand for the bonds and the Italian government raised €5.57bn ($6.5bn; £4.9bn). Elsewhere, European stock markets made a modest recovery and the euro rose after a turbulent session on Tuesday. The benchmark index in Milan rose 1% and London and Frankfurt were trading higher. Paris was dragged lower by a sell-off in French banks' shares amid concerns about their exposure to Italy. Seema Shah at Principal Global Investors said: "Demand at today's auction was very encouraging, and clearly indicates that investors still have faith in the Italian economy, if not the government. Italy is unlikely to face major refinancing problems in the near term." Barclays investment strategist Hao Ran Wee said: "No investor would lend to the Italian government if they deem it as being unable to pay back its debt."