Italian default fears hit markets
THE turmoil on world markets intensified today amid fresh fears of an Italian default after the country's borrowing costs soared to unsustainable levels.
Italy's borrowing costs remained well above 7pc today, which matches the levels that pushed Ireland and Portugal into multibillion bail-outs from the EU and IMF, sparking renewed fears the debt-laden country will default.
The FTSE 100 Index fell more than 1pc at one stage on top of yesterday's 2pc slide, although it pared some of its earlier losses in another volatile period of trading.
The Dow Jones in the US fell 3pc overnight, while the Hang Seng in Hong-Kong was down more than 5pc amid fears over the future of Italy and the eurozone.
As one of the biggest economies in the eurozone, Italy is widely seen as being too big to bail out.
The serious nature of Italy's problems is understood to have triggered discussions between France and Germany about how to split the currency bloc up to separate weak and strong countries.
Terry Pratt, a trader at IG Markets, said: "With Italy hurtling towards the brink as bond yields spiral, global equity markets are taking fright and traders are embarking on another flight to safety as they keep pulling money off the table."