Markets buoyed by Italy
February 25, 2013
Italy's FTSE MIB stock market index extended a rally on Monday, while the yield on the country's benchmark ten-year government bonds dropped to 4.15 percent - down by about 3 percent from a year ago, when concern for Italy's finances was at a fever pitch.
Italy's bond yield spread to that of German government debt dipped below 260 basis points, which was its lowest since February, and a sign that markets consider Italy's debt-laden state finances on the road to recovery.
The upbeat mood came about as early polls in Italy's two-day general election showed the centre-left coalition, led by Pier Luigi Bersani, leading the conservative bloc of former Prime Minister Silvio Berlusconi.
The horror scenario of a return to power by Berlusconi had failed to materialize, Commerzbank analysts Jörg Kramer told Reuters news agency.
"Italy was heading for the abyss and Monti stopped it. But the country has not yet shifted into reverse gear," he added.
The prospect of Bersani now forming a coalition with Mario Monti - the former technocrat premier credited for his pro-reform policies - buoyed financial markets in other European countries.
Germany's DAX index rose more than 2 percent, more or less in line with the stock markets in France, Spain and Great Britain. US stocks also opened solidly on Monday.
uhe/msh (AP, Reuters, dpa)