Italy sold the top planned amount at a bond auction today paying the cheapest three-year yield since the launch of the euro as uncertainty over the future of prime minister Enrico Letta failed to unnerve investors hunting for returns.

Italy sold €7.5 billion in three-, seven- and 30-year bonds just hours before a party meeting that may trigger Letta's resignation and the appointment of a new government headed by centre-left leader Matteo Renzi.

The Treasury paid 1.41 per cent to sell a December 2016 bond, down from 1.51 per cent paid a month ago and new euro lifetime low. The sale was covered 1.4 times, the same as in January.

It also sold a 30-year bond last issued in November at an average 4.59 per cent yield, the lowest in seven years. It met demand for nearly 1.4 times the amount on offer. The bond had last fetched a 4.99 per cent yield at a sale covered 1.5 times.

Analysts say that investors see a low risk of snap elections and are reassured by the support offered by the European Central Bank and the first signs of recovery in the Italian economy.

Italy also sold a new tranche of a seven-year bond at 3.02 per cent, down from 3.17 per cent paid a month ago when this newly-introduced maturity was offered at auction for the first time. Demand was in line with January.

Reuters