Italian yields rise on sovereign debt fears

July 26, 2012 - 6:36 AM

MILAN (AP) — Investor concern about Italy's ability to return its sluggish economy to growth push the country's borrowing costs up to their highest level since November in a sale of two-year bonds.

Italy Thursday paid 4.86 percent to sell €2.5 billion ($3.03 billion) in two-year debt, up from 4.71 percent a month ago. Demand was a strong — 1.78 times the relatively modest offer.

It was the highest rate paid on two-year bonds since Premier Mario Monti's government of technocrats took power with the remit of protecting Italy's economy from the European debt crisis.

Despite austerity and economic reform measures, investors are worried that Italy will not be able to control its public debt, which has reached 123 percent of GDP — the second-highest among the 17 countries that use the euro.