Italy pays record debt interest on new bonds

The cost of borrowing for Italy's government has touched a new eurozone record of 6.29% in its latest bond auction. It is alarming situation for Italy.

The news came as the yield on traded Spanish government bonds increased above 6% for the first time since August.

And official figures from Eurostat look eurozone industrial production for September decrease 2% from August.

European markets touched with uncertainty to the news, with the FTSE closing nearly 0.5% decrease on the day.

Frankfurt's Dax index ended 1.2% down, while the Cac-40 index in Paris lost 1.3%. In New York, the Dow Jones fell 0.5% in morning trade.

Investors are in wait to see if Italy can form a new government under the leadership of economist Mario Monti.

Italy sold 3bn euros ($4.2bn, £2.6bn) of 5-year bonds at a 6.29% yield on Monday.

Spanish debt is trading at its highest level since the European Central Bank intervened to decrease the cost of borrowing in August.

A high yield directs investors may not have confidence in the government to fully repay its debts.

The yield on existing Italian debt, traded in the market, topped 7% last week before falling back, after parliament passed new austerity measures and Prime Minister Berlusconi resigned.

High interest rates - or yields - become a main problem for the government if it is forced to pay them when it issues new debt.

Now Italy is paying 6.29% rate on new debt since 1997.

It compares with a rate of 5.32% at a similar auction in October.

Spain did not issue any debt on Monday but its government will be concerned by the increasing

Around 200bn euros worth of Italian debt will need to be refinanced by April next year.

Obama outlines pan-Pacific trade plan at Apec summit

US President Barack Obama has submit the broad outlines of a plan to create a trans-Pacific free trade zone at an annual regional summit in Hawaii.

"I'm sure we can get this done," Mr Obama said at the Asia-Pacific Economic Co-operation (Apec) talks.

Nine Apec nations are participate in the Trans-Pacific Partnership (TPP), but China has not agreed  so far expressed interest in joining the talks.

In all, 21 Apec countries account for more than 44% of global trade.

They also make up some 40% of the world's population.

Speaking in Honolulu on Saturday, Mr Obama said: " this combination boost exports and create more goods available for our consumers, create new jobs. Compete, capture new markets in future"

Italy crisis: Lower house to vote on austerity law

The lower house of Italy's parliament is due to vote on a package of austerity measures required by the EU and designed to restore markets' confidence in the country's economy.

The vote will pave the way for PM Silvio Berlusconi to resign.

A technocrat government run by ex-EU commissioner Mario Monti seems likely.

The Senate on Friday withdraw the plan, which includes a increase in the pension age, a fuel price hike and the sale of state assets.

Following the vote, shares in most European markets has been increased 2-3%, and the interest rate paid on Italy's 10-year bonds dropped.

IMF chief Christine Lagarde has appreciated the "significant progress" made in tackling the political instability in Italy and Greece, where interim Prime Minister Lucas Papademos was sworn in at the head of a new cabinet on Friday.

"What we wanted at the IMF was political stability and a clear policy in Italy and Greece. I believe this progress has been made," she said on Saturday during a visit to Tokyo.

Italy crisis: Senate to vote on austerity measures

The Italian senate has start a debate - to be followed by a vote - on austerity measures designed to avoid a bailout of the eurozone's third biggest economy.

The measures are likely to be sanctioned, with the lower house voting at the weekend and paving the way for Prime Minister Silvio Berlusconi to resign.

A technocrat government possibly led by former EU commissioner Mario Monti is being debated.

On Thursday, Italy increased 5bn euros (£4.3bn) from new government bonds.

But this was at an interest rate of 6.087% to borrow the money for one year. 

A vote in the upper house is expected on Friday afternoon or evening.

Mr Berlusconi, who lost his parliamentary majority in a vote on Tuesday, has promised to leave Prime Minister seat after the austerity measures are passed by both houses of parliament.

Forex Business Trend: Italy borrowing costs hit record 7%

Forex Business Trend: Italy borrowing costs hit record 7%

Italy borrowing costs hit record 7%

Italy's cost of borrowing has increased to a new record, a day after Prime Minister Silvio Berlusconi said he would resign after budget reforms are passed.

The yield on 10-year government bonds reached more than 7%, the highest since the euro was founded in 1999.

Investors hasitate that Italy could become the next victim of the debt crisis.

The 7% cost of borrowing is widely viewed as unsustainable and was the level at which Portugal, Greece and the Irish Republic were forced to seek a bailout.

In comparison, Germany's implied cost of borrowing for 10 years is 1.73%.

In this scenario "No one agrees to lend to a country when that country would use the loan to pay the interest on previous loans - that's throwing good money after bad."

The debt was also pushed up as a clearing house asked for a larger deposit to trade Italian bonds - to cover the raised risk of default.

Economic Affairs Commissioner Olli Rehn called the situation in Italy "very worrisome". A team from the European Union is due in Rome on Wednesday to start monitoring how Italy plans to cut its soaring debt burden.

It is expected that Italy's parliament could sanction a package of budget reforms by the close of the month, after the Italian president engages in consultations with the political groups on the way forward.

Italian crisis: Silvio Berlusconi faces calls to resign

Italian PM Silvio Berlusconi is facing growing calls to resign from PM seat, after apparently losing his majority in the lower house of parliament.

He won a budget vote, but got votes of less than half of MPs.

After the vote, opposition leader Pierluigi Bersani urged him to resign. Allies including the Northern League had already said he should resign.

Borrowing rates have shot up in recent days, raising concerns over whether Italy can service its debts.

While Italy's deficit is relatively low, investors are concerned that the combination of Italy's low growth rate and 1.9tn euro (£1.63tn; $2.6tn) debt could make it the next country to down in the eurozone debt crisis.

The European commissioner for economic affairs Ollie Rehn said the country's economic and financial situation as "very worrying".

Rival demonstrators gathered outside parliament, some shouting "Resign", others "We are not Greece".

Italy borrowing rates hit new record as vote looms

The Italian government's cost of borrowing has increased to a new record ahead of a crucial vote for Prime Minister Silvio Berlusconi.

The yield on Italian 10-year bonds increase to 6.73%, the highest since the euro was founded in 1999.

Investors hesitate that the eurozone's third-largest economy could become the next victim of the debt crisis.

Markets briefly rallied on Monday on bogus reports that Mr Berlusconi would step down.

Italy's benchmark 10-year debt has been increasing sharply and the yield is now past the point that forced other eurozone countries to seek a bailout.

The country's cost of borrowing has been increased than the 1.8% interest rate currently faced by Germany.

Greece, the Irish Republic and Portugal have all been bailed out.

Japan buys 10% of eurozone bailout fund's bond issue

Japan's Ministry of Finance has announced that Japan bought 10% of the latest bonds issued by the eurozone's rescue fund.

Japan finance ministry said Japan purchased 300m euros ($413m; £257m) of bonds issued by the European Financial Stability Facility (EFSF).

Japan's purchase is the smallest amount it has bought so far from the fund. It will be healthy sign for euro zone.

Eurozone leaders have been seeking raised investment in the fund to help finance debt-laden economies.

Previous month, they confirmed to raise the size of the bailout fund to 1tn euros.

Japan has purchased bonds from the EFSF on three previous occasions taking its holdings to 2.975bn euros.

Pressure on Greece ahead of G20

The Greek prime minister faces increasing international pressure as financial crisis talks start on the eve of the G20 summit.

George Papandreou's surprise decision to call a referendum on the eurozone rescue plan agreed last week has continued to unsettle the markets.
French President Nicolas Sarkozy and German Chancellor Angela Merkel are set to start talks shortly ahead of a meeting later with Mr Papandreou.
Leaders heading for France urged the eurozone to put its house in order.
The two-day meeting in Cannes of government heads from the Group of 20 major world economies formally starts on Thursday.