Bond spread with Germany closes at 253
Milan, other European financial markets close lower08 October, 20:01
Milan's key FTSE Mib fell by 0.29% to close at 18,372.
Investors were concerned as the government shutdown in the US continued, raising fears that the issue will hurt upcoming talks on raising the debt ceiling in the world's biggest economy.
Markets were also fretting over reports of falling manufacturing orders in Germany in August for the second month in a row, suggesting sluggish growth in the Eurozone's largest economy.
Financial markets had expected an increase.
Bond markets were stable with little change in the spread between Italy's benchmark 10-year bond and its ultra-safe German counterpart.
The spread closed at 253 basis points, up slightly from Monday's 248 basis points, with the yield on Italy's 10-year paper at 4.34%.
The spread between lending rates in the two countries is an important indication of investor faith in the Italian economy, and the government's ability to work cooperatively to cope with a lingering recession.
Other European markets were weak on the day as Spain's IBEX 35 fell by 0.67% to close at 9,318.90 points while Frankfurt's DAX fell by 0.42%, closing at 8,555.89 points.
In Paris, the CAC 40 fell by 0.77%, ending trading at 4,133.53 points, while in London, the FTSE index of leading British shares lost a whopping 1.11% on the day, closing at 6,365.83.