Italian bonds are back on course amid europe hopes
International markets rediscovered their appetite for IOUs from struggling Italy today as prime minister Mario Monti presented plans for €30 billion (£25.7 billion) in fresh austerity measures.
Shares across Europe were also buoyed by rising hopes that German chancellor Angela Merkel and French president Nicolas Sarkozy could set out plans for a tighter monetary union on Friday, clearing the path to a solution to the sovereign debt crisis.
Stock markets in Italy and Spain were up 2.3% and 1.7% , while the FTSE 100 rose 32.44 at 5584.73.
Italian borrowing costs fell more than 50 percentage points to 6.1% as Monti's Save Italy package went some way to convincing investors that its new technocrat leader could put the embattled nation's finances back in order.
Italy's borrowing costs surged to nearly 7.5% last month, triggering fears of a disastrous bailout.
The borrowing costs of Spain (below) dropped to 5.2%.
CMC Markets analyst Michael Hewson said: "People are positioning themselves on the off-chance that 'Merkozy' actually come up with something tangible.
"People have been so concerned with the sovereign debt situation but now there's a chance that the eurozone leaders are finally coming to some form of long-term solution," he added.
