Italy borrowing costs more than double on debt worries

Italy's borrowing costs have more than doubled in a pair of bond auctions amid new market uncertainty about its debt and growth prospects.

Italy easily sold Euro 8 billion ($10.5 billion) in 12-month bonds on Wednesday, but the interest rate investors demanded rose to 2.84 per cent from 1.40 per cent last month.

The government also sold Euro 3 billion in three-month bonds, with the borrowing costs rising to 1.25 per cent from 0.49 per cent.

Italy's borrowing rates had eased in recent months after the European Central Bank gave the financial sector emergency loans and the technical government of Mario Monti implemented austerity measures.

But uncertainty has returned to Europe, pushing borrowing rates higher, particularly in Spain. In the secondary market, where issued bonds are traded openly, Italy's 10-year bond yield was at 5.55 per cent, up from around 5.0 per cent last week.