Spread up two points to 226
Still lowest since July 201112 December, 18:47
A narrower spread indicates greater investor confidence in the Italian economy and Rome's ability to pay down its huge debt.
Analysts said investors were responding to firmer prospects of political stability after confidence votes in Italy's new left-right government.
Markets posted moderate losses across Europe as better-than-expected US retail sales increased concerns about when the Federal Reserve will start easing stimulus policies.
The Milan bourse closed 0.94% down, the second biggest loser in Europe after London which closed 0.96% down. Frankfurt was 0.66% down, Paris 0.43%, Madrid 0.93% and Athens 0.84% down.