14 Sep 2011

Italy's borrowing costs soar

1:34 pm on 14 September 2011

Italy's borrowing costs have hit a new high, reflecting a continuing lack of confidence in the nation's finances.

The euro zone's third largest economy raised 3.85 billion euros in five-year bonds in Tuesday's auction but the interest rate rose to a record but the interest rate rose to 5.6%, up from 4.93%

The European Central Bank has been buying Italian bonds, but there was no immediate disclosure on whether it had intervened in this latest auction.

Italy has about 1.9 trillion euros of debt and must raise about 70 billion euros by the end of the year, the BBC reports

The government will start talks in the next few days on more measures to stimulate economic growth and reduce the debt burden.