Rates fall in Italian bond sale

Italy's borrowing costs drop in sale of 1-year treasury bonds

Associated Press

ROME (AP) -- Italy has seen its costs of borrowing drop in a sale of one-year Treasury bonds.

Interest rates dropped from 2.735 percent to 2.23 percent in Monday's auction. Italy put euro8.5 billion ($11.21 billion) of 12-month bonds up for auction. Demand slightly outstripped the offer.

Also auctioned were euro3.5 billion ($4.62 billion) in bonds maturing on June 21. Rates on those dipped from 1.644 percent to 1.546 percent.

The third auction this year tested market sentiment on the country's handling of its debt since ratings agencies cut in their credit ratings last month. Italy's government, led by economist Mario Monti, is battling the budget deficit with austerity cuts and new taxes amid a stagnant economy.

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