Bond spread hits 280 but closes at 260 basis points
Milan shows gains after political crisis appears to be calming01 October, 19:12
Milan's FTSE-Mib jumped by a remarkable 3.11% to close trading at 17,977.06 points.
The rise was driven by sharp increases in the value of shares in Mediaset, which soared by a whopping 6.6%, as well as most banks including Intesa Sanpaolo SpA, gaining 6.43% and Unicredit, which jumped by 5.31%. Investors seemed upbeat after senior politicians suggested Tuesday afternoon they might support the coalition government of Premier Enrico Letta when he calls a confidence vote on Wednesday.
Bond markets seemed initially nervous, widening the spread between Italy's 10-year bond and its ultra-safe German counterpart.
However the spread, which hit 280 basis points during the session after ending Monday at 265 points, ultimately closed at 260 basis points on Tuesday.
The yield on Italian 10-year paper closed at 4.40%.
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 rose by 1.1%, closing at 8,689.14 points.
In Paris, the CAC 40 jumped by 1.28%, ending trading at 4,196.60 points, while in London, the FTSE index of leading British shares was essentially unchanged on the day, closing at 6,160.01.