Italy's borrowing costs have spiked higher towards levels that forced Greece, Ireland and Portugal to be bailed out. The yield on Italy's ten-year bond is up another 0.32 percentage point at 6.43 percent, a new euro-era high. A yield above 7 percent is widely thought to be unsustainable.
News that Italy's Premier Silvio Berlusconi, who is trying to push through his third austerity package in less than six months, has asked the IMF to help monitor its economic and fiscal reforms has only reinforced market worries over the country's debt burden, which stands at around 120 percent of national income, the second highest in the eurozone behind only Greece.
What's particularly concerning is that Italy's borrowing costs have spiked higher, even though the European Central Bank has been buying the country's bonds in secondary markets in an attempt to keep the yields down.
"The risks associated with Italy have increased markedly over the past week or so," said Jeremy Batstone-Carr, director of private client research at Charles Stanley.
