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Italian PM holds press conference on debt crisis

12-29-2011 19:48 BJT

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Italian Prime Minister Mario Monti is giving a press conference in Rome, on his country’s financial debt crisis. We take a look at the live feed from the press conference.

The eurozone’s third largest economy, Italy has raised 8 billion euro in bonds that are due in three, seven, and ten years. The bond sale came after the release of a business confidence index for December, when retail sectors struggled due after a plunge in Christmas sales.

Analysts say this is a crucial test for the technocrat government, as this is the first time Italy is launching a big auction of long-term bonds.

The outcome will set the tone for a string of debt sales through early 2012, that risk stretching the eurozone bond markets to a breaking point.

EU authorities are hoping commercial lenders will use last week’s flood of cheap liquidity from the European Central Bank to soak up southern European debt and bring yields back under control.

On Wednesday the Treasury raised 9 billion euro in six month bonds at a rate of 3.25 percent, that is half the rate of 6.5 percent that it was forced to pay in November and below the level of 3.53 percent it paid in October.

Borrowing costs have spiked to record highs across the 17-nation eurozone in the past few months over fears that economies like Italy could be forced to seek giant international bailouts after Greece, Ireland and Portugal.

European leaders have agreed to strengthen rules and sanctions for keeping public accounts in order but there are lingering doubts about the deal and about the impact of an expected slowdown in eurozone growth in 2012.

Italy took its first step into recession with an economic shrinkage of 0.2 percent of output in the third quarter. And the government is forecasting a contraction of 0.4 percent in 2012, adding pressure for pro-growth reforms.

Italy spooked the financial markets this years with its painfully low growth and a sharp rise in borrowing costs raising fears of an imminent blow-up of its giant debt, which is equivalent to 120 percent of its GDP.

Former PM Silvio Berlusconi’s replacement by Monti in November has helped calm nerves, although there is still concern about the impact on the economy of his draconian plan, which includes tax increases and pension reforms.



Editor:Zhang Pengfei |Source: CNTV.CN

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