Italy's borrowing costs drop

Italy's borrowing costs dropped in an auction of six-month bonds on Friday that raised 8.5 billion euros ($10.4 billion) following a European Central Bank pledge to do everything to save the euro. The rate on the six-month bonds dropped to 2.454 percent compared with 2.957 percent at the last similar operation on June 27, the Bank of Italy said.
ECB head Mario Draghi's comments on Thursday that the bank is "ready to do whatever it takes to preserve the euro" appeared to reassure skittish investors, and sparked a welcome turnaround on Italy's stock exchange. The drop in borrowing costs "is due to Mario Draghi's intervention, which arrived at just the right moment," Cyril Regnat, bond specialist with the French bank Natixis, told AFP. "But will it last?" he asked. The test will be a medium- to long-term bond sale on Monday, at which the treasury hopes to raise up to 4.75 billion euros in five and 10-year bonds.