ECB warning, election jitters weigh on Milan markets
Spread between Italian, German bonds continues to widen18 February, 20:12
The Italian bond spread with the German benchmark also increased amid concerns over the outcome of the national vote, to be held next Sunday and Monday.
The spread, an important gauge of investor confidence in the Italian economy, closed the day at 277 basis points - slightly higher than the 273 basis points where it ended last week's trading.
The yield Monday on 10-year paper stood at 4.40%.
Fears over the outcome in the Italian vote, which will have a ripple effect throughout Europe, weighed on other markets as well.
Investors are especially spooked by the possibility that a government by ex-premier Silvio Berlusconi would undo many of the financial and economic reforms put in place by technocrat Premier Mario Monti.
Investors were also concerned after the president of the European Central Bank Mario Draghi said that economic weakness is likely to continue in early 2013. "Available indicators signal further weakness at the beginning of 2013, with domestic demand remaining dampened," Draghi said in a statement Monday before the European Parliament's Committee on Economic and Monetary Affairs.
"This is due to weak consumer and investor sentiment and to the necessary balance sheet adjustments in both the public and private sectors. "Foreign demand also remains subdued".
On other European markets, Frankfurt's DAX gained 0.46% to reach 7,628.73 points, while London's FTSE 100 fell by 0.16% to close at 6,318.19 points, Paris's CAC 40 ended the day slightly higher, gaining 0.18% to close at 3,667.04 points, and Spain's IBEX 35 closed trading 0.51% lower at 8,108.90 points.