Italian bonds come under renewed pressure
Nikhil Kumar is The Independent's New York correspondent. He was formerly assistant editor on the foreign desk and has also done a variety of jobs on the city desk, where he wrote about markets, commodities and other business and economics topics.
Tuesday 01 November 2011
The market continued to put pressure on Italy yesterday, with Rome's borrowing costs rising back to levels not since seen the European Central Bank (ECB) stepped in to support its bonds in August.
The interest rate on the country's 10 year fixed-rate bonds rose above 6.1 per cent, against 5.9 per cent last week and as low as 4.9 per cent in mid-August. It has remained below 6 per cent since the ECB intervened in the bond markets in early August.
The sense of crisis was also apparent in the widening spread between Italian and German bonds. The premium that investors demand to hold Italy's debt over Germany's rose to as much as 410 basis points, with the focus firmly on Prime Minister Silvio Berlusconi's ability to implement the reforms needed to put his debt-laden country on a more sustainable path.
Continental stock markets were similarly unsettled, with the Milan exchange down by 3.4 per cent last night. With the euphoria generated by last week's debt crisis deal looking like a distant memory, the Spanish market fell by 2.6 per cent , while the French and German exchanges were nearly 3 per cent lower.
Piling on the pressure, one of Italy's leading businessmen said the county had reached the "point of no return".
In a letter published in the Italian press, Luca Cordero di Montezemolo, the head of the Ferrari sports car business, said: "The savings of Italian people, social cohesion and Italy's membership of the euro are all at risk."
The rising borrowing costs also present a challenge for Mario Draghi, the Italian central banker who will take over from Jean Claude-Trichet as the president of the ECB today. The Italian economy is widely seen as too big to bail out, and an escalation in Rome's travails would overshadow the challenges presented by the likes of Greece or Ireland. But Mr Draghi is expected to run into renewed opposition from Germany if he seeks to ramp up the central bank's bond buying programme to soothe market jitters.
Exclusive: World’s most pristine waters are polluted by US Navy human waste
Missing Malaysia Airlines Flight MH370: Any terrorist seizure of the plane ‘would have required one hell of a piece of planning’
Croatia's second city to close 'worst zoo in the world' after reports of 'nightmare' conditions and 'depressed' animals
Missing Malaysia Airlines Flight MH370: Hijackers, pirates or suicide – the theories surrounding the mystery
Missing Malaysia Airlines Flight MH370 Q&A by Simon Calder: How far could it have travelled? Who was responsible and what would their plans be? And how can a plane just vanish?
Katie Hopkins continues campaign to become Britain's most hated talking head with poorly timed Bob Crow tweet
No EU referendum under Labour: Ed Miliband to reveal that vote on membership is ‘unlikely’ in next Parliament if party wins power
Grace Dent: Who cares if she spells it Barraco Barner? Gemma Worrall is more employable than some bookish arts graduate
The rise of Ukip: Study warns Labour that Eurosceptic party's electoral base now 'more working class than any of the main parties'
Europeans have ‘got whiter’ due to natural selection in past 5,000 years, scientists say
Fracking is turning the US into a bigger oil producer than Saudi Arabia
- 1 Is your name now 'banned' in Saudi Arabia?
- 2 Exclusive: World’s most pristine waters are polluted by US Navy human waste
- 3 Nemanja Matic interview: My family were in tears when we left Lisbon
- 4 Missing Malaysia Airlines Flight MH370: Jet ‘hijacking’ began soon after take-off
- 5 'Missing Malaysia Airlines Flight MH370 plane found in Bermuda Triangle!' Facebook links are profiting hackers
iJobs Money & Business
£35000 - £43000 per annum + Bonus and Benefits: Harrington Starr: A global lea...
£50000 - £60000 per annum: Harrington Starr: Linux Systems Administrator - UNI...
£32000 - £36000 per annum + generous benefits: Pro-Recruitment Group: * TAX * ...
£37000 - £40000 per annum + £20000 benefits package: Pro-Recruitment Group: **...