The Italian Treasury sold three billion euros of 5-year bonds as targeted, while yields on the bonds surged to 6.29%, the highest since 1997, up from 5.32% in the October 13 auction. Demand was 1.47 times the amount compared with a previous of 1.34 times in October.

Borrowing costs surged despite the fact that Italy was able to solve the political instability, where the former Prime Minister, Silvio Berlusconi stepped down leaving the leadership in the hands of Mario Monti, the former European Union Commissioner, who is expected to restore confidence and spur growth.