Market pressures ease for both Italy, Spain
ROME (AP) — The market pressures on Italy and Spain eased Thursday following a tough few days, which have stoked fears that the eurozone's third and fourth largest economies were getting dangerously embroiled in Europe's debt crisis mire.
Those concerns prompted Italian Prime Minister Silvio Berlusconi to insist that the country's economic foundations and his government were solid. A day after his remarks, the yield on Italy's ten-year bonds were down slightly below 6 percent, while Milan's main stock market rose, albeit a modest 0.2 percent.
The pressures on Spain, another country whose financial stability is under scrutiny, have also moderated. Its ten-year yield was down 0.16 percentage point to 6.06 percent while Madrid's main market rose 1.1 percent. There will be a lot of interest in a Spanish bond auction later to see what impact this week's turmoil in the markets has had on demand for the country's debt.
Berlusconi spoke to parliament Wednesday, vowing to complete his five-year term and stepping up reforms to spur growth. He called for a cross-party effort to avert a Greek-style financial crisis.
The Italian leader meets unions and business leaders in Rome later to map out a strategy for reforms.
Berlusconi's speech had been eagerly awaited, and was delayed after financial markets had closed for the day. However, some observers criticized it as too vague.
"Too much perfunctory optimism, too many generic references to reforms," wrote Italy's financial daily Il Sole 24 Ore. It said the reforms are "always evoked, never carried out."
Berlusconi said investors who were pushing up Italy's borrowing rates did not recognize the country's fundamental strengths. He noted the country's stable banking system, low levels of private sector indebtedness — half that of the United States and Britain — and a strong entrepreneurial spirit.
However, he said "there is more to do."
Last month, Italy passed a euro70 billion ($99 billion) austerity package that aims to balance the budget by 2014. But the measures have failed to calm market fears over the solidity of the eurozone's third largest economy.
The opposition has called for Berlusconi's resignation.