New investor confidence boosts Italian economy

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Borrowing costs for southern European countries have fallen since the European Central Bank brought in unprecedented measures in June. Money photo: Shutterstock
09:39 CEST+02:00
Interest on Italian and Spanish debt fell to record low on Monday, while Portugal's continued to drop, as investor concerns about the eurozone's former laggards eased.

Borrowing costs for southern European countries have fallen since the European Central Bank brought in unprecedented measures in June to help boost weak inflation in the bloc.

Investors have also been cheered by upbeat data, with Italy's borrowing costs touching a new low of 2.666 percent, down from 2.714 percent.

"The fact that these rates continue to decline and there is no reversal shows that nobody sees issues that are likely to push yields higher," said Patrick Jacq, a bond strategist at BNP Paribas.

The improving sentiment marks a sharp turnaround from recent years when investors feared Italy and Spain could join Greece and Portugal in needing an international bailout.

Sentiment towards Portugal has also improved in recent weeks after its credit rating was upgraded by Moody's ratings agency thanks to its improving public finances.

"The market accepts that the country is moving away from a critical situation," said Jacq.

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Italians too are becoming more positive about their economy, as a report published last week found consumer confidence up in the second quarter of 2014. Italy still however has a long way to go, registering the fourth-lowest consumer confidence score in Europe.

READ MORE: Italians more confident about money matters

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