The Italian Treasury sold 3 billion euros of 5-year bonds, producing yields of 6.47%, up from 6.29% recorded in November auction, with bid-to-cover ratio declining to 1.42 times from 6.29 times recorded an auction earlier.

Italy sold the maximum target for the auction despite the rise in yields, which climbed to the highest record seen since 1997, and in result led the parliament to prepare an additional 30 billion euros of emergency budget cuts.

Yesterday, Italian parliamentary committees prepared the plan and now eyes will be focused on the vote from the Italian upper and lower houses, yet expectations indicate that lawmakers will approve the plan especially when a failure could trigger an Italian collapse and could also threaten the common currency, according to Monti.

Monti told the Finance and Budget Committees of the Chamber of Deputies last night in Rome we are confident that markets will react positively to the efforts Italy is making, maybe not tomorrow, but the reduction in borrowing costs that we anticipate in the coming months will help spur the economy.

Italy has 53 billion euros of maturing bonds in the first quarter of 2012, a part of the total amount of bonds worth 157 billions maturing next year, according to the UBS AG.