Markets fall as Italian borrowing costs hit 7%
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Markets across Europe have fallen this morning as concerns around Italy continue to grow.
The yield on Italian 10-year government bonds passed 7 per cent for the first time since the euro was founded in 1999 adding to fears that it could be the next country to fall victim to the eurozone debt crisis.
At 13.03, the FTSE 100 was down 2 per cent to stand at 5457.52 while the French Cac 40 and the German Dax were both down over 2 per cent. Italy’s main index, the FTSE MIB, is currently down over 3 per cent.
Rates on the 10-year bonds are currently the highest since June 1997, when Italy still had the lira.
The 7 per cent rate is generally seen as the limit that makes debt unsustainable. The greater the yield, the greater the borrowing cost for Italy, which is the third largest economy in the eurozone.
The concerns have continued despite the news that Italian Prime Minister Silvio Berlusconi has confirmed he would step down after losing his parliamentary majority on Tuesday.
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