Cost of Italian borrowing reaches record high
Yields on Italian government bonds hit their highest level since the introduction of the euro ten years ago in an auction.
The move signals mounting fears for the third biggest economy in Europe and ongoing concerns that Greece will default on its debt.
Italy is dependent on the European Central Bank and the surge in yields suggests that investors are now turning against Italy, despite new austerity measures introduced as recently as the weekend.
The Italian Treasury sold a total of €6.485 billion worth of bonds but was forced to pay a record yield of 5.6pc on nearly €4bn of five-year paper.
Its target was €7bn.
Investor demand was also lower than in earlier auctions and yields on 10-year Italian bonds had climbed to 5.7pc by mid-morning.