Italy-Germany spread climbs to 241 basis points
Milan, other European markets little changed amid uncertainty25 September, 19:18
Milan's FTSE-Mib rose by 0.14% to close trading at 18,089 points after reports that US durable-goods orders were slightly higher in August than in July, when they showed a sharp drop, the Commerce Department said. New orders for durable goods rose by 0.1% to $224.9 billion in August, led by machinery, fabricated metal products and computers.
Although the results were not extremely strong, they showed an improvement over the previous report.
That indicated an 8.1% drop in July from June, showing continuing weakness in the economy, aside from the aircraft business.
At the same time, worries over the looming US debt ceiling weighed on investors.
The US Treasury will soon reach its $16.7 trillion borrowing limit unless legislators agree to raise the debt ceiling by the October 1 deadline.
At issue is a temporary spending bill required to keep the US government fully open after the start of the new budget year, when the government will hit its spending limits.
If that happens, and it appears the US cannot pay all of its bills, confidence in the world's largest economy will suffer.
Bond markets seemed upbeat on the German report, widening the spread between Italy's 10-year bond and its ultra-safe German counterpart.
The spread closed at 241 basis points, up very slightly from 240 basis points one day earlier while the yield on Italian 10-year paper closed at 4.23%.
The spread between lending rates in the two countries is seen as an indication of investor faith in the Italian economy and its ability to cope with a lingering recession.
On other European markets, Spain's IBEX 35 gained 0.80% to close at 9,242.90 points while Frankfurt's DAX was essentially unchanged, closing at 8,665.63 points.
In Paris, the CAC 40 was also essentially unchanged on the day, ending trading at 4,195.35 points, while in London, the FTSE index of leading British shares shed 0.30% to close at 6,551.53.