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Spread closes 13 points down

Yield below 4% for first time since May

02 January, 19:16
Spread closes 13 points down (ANSA) - Rome, January 2 - The spread between Italian 10-year bonds and their AAA-rated German equivalents, the premium investors pay to hold Italian paper, on Thursday closed a whopping 13 points down on Tuesday's mark of 216 points, at 203, a fresh low since July 2011.

The yield was 3.96%, down from 4.08% Tuesday.

It was the first time the 10-year bond rate had fallen below 4% since May. 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 a good bond sale and the prospect of political stability as Italy's left-right government embarks on reforms in the New Year, although pointers were seen as weak in thin holiday trading.

European markets posted mostly moderate losses after a recent string of gains on optimism that the US economy is strong enough to withstand the gradual withdrawal of monetary stimulus.

The Milan bourse closed 0.20% down despite a 16% surge by Fiat after completing its takeover of Chrysler.

London was 0.46% down, Frankfurt 1.59% down, Paris 1.60% down and Madrid 1.58% down.

Athens bucked the trend with a 3.64% rise.