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Italy's leading financial index drops in trading Thursday

Spread between Italian, German bonds closes at 189 basis points

13 March, 19:07
Italy's leading financial index drops in trading Thursday (ANSA) - Milan, March 13 - Italy's main financial market, like almost all other European exchanges, fell dramatically on Thursday amid rising tensions over the crisis in Ukraine and possible impacts on energy supplies for the continent.

The FTSE Mib fell by 0.91% to close at 20,591 points despite earlier gains after strong bond sales and low yields suggested markets were pleased by a package of tax cuts and reforms announced one day earlier by Premier Matteo Renzi. However investors have grown more jittery as a referendum is scheduled for Sunday over the future of the Ukraine region of Crimea, where a majority of the population is ethnic Russian.

Also on Thursday, German Chancellor Angela Merkel said the European Union was ready to impose sanctions on Russia if it does not back down from its involvement in Ukraine.

On the Italian bond market, the spread between Italy's benchmark 10-year bond and its ultra-safe German counterpart closed at 189.4 basis points - higher than the previous day's close of 182 basis points and 175 basis points on Tuesday.

The yield on Italy's 10-year paper ended Thursday's trading at 3.43%.

The spread between lending rates in the two countries is an important indication of investor faith in the Italian economy.

On other European markets Spain's IBEX 35 fell by 1.19%, closing at 9,950.30 points and Frankfurt's DAX plunged by 1.86%, closing at 9,017.79 points.

In Paris, the CAC 40 fell by 1.29%, ending trading at 4,250.51 points, while in London, the FTSE index of leading British shares shed 1.0%, closing at 6,553.78 points.

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