Italian bonds trimmed early losses yesterday after the results of a bond auction reassured markets the country still has demand for its debt, but also showed the cost of borrowing remains persistently high.

The main feature of the €7.29 billion sale, Italy’s first long-term debt auction in a month, was the launch of a new 10-year bond, which sold at a yield of 5.82 per cent, the lowest since March.

The sale benefited from the market’s high expectations the European Central Bank will reveal details of a beefed-up bond-buying programme next week as part of a co-ordinated effort to lower borrowing costs for Spain and Italy.

Italian 10-year bond yields initially fell after the results, but last stood one basis point higher on the day at 5.79 per cent. – (Reuters)