26 Nov 2011

Borrowing costs almost double for Italy

9:42 am on 26 November 2011

Italy has had to pay record rates to investors to borrow money in the latest auction of government bonds.

Bonds due to be repaid in two years time hit 7.8%, compared with 4.6% in the last sale a month ago.

The rate of interest for the new debts due to be repaid in six months was 6.5% compared with 3.5% in late October.

A BBC correspondent says the result of the bond sale provides further evidence of the tensions that persist in eurozone financial markets.

They say the only encouraging element for the Italian Government is that it managed to raise all the money it wanted.

The rate it was forced to pay is being seen as a clear sign that the financial markets are not convincted that Italy's new technocrat administration will be able to get on top of the debt problem.