Italy and Spain See Concerns Ease on Hopes of Action

Investor concerns over Italy and Spain eased on Monday on hopes that the eurozone authorities would act to lower borrowing costs.

Spain's 10-year borrowing costs dropped to 6.6% from last week's record high of 7.5%, reflecting a slight improvement in investor confidence.

Italy paid a lower rate of interest at a bond auction to raise 5.48bn euros (£4.2bn).

The US Treasury Secretary is also in Europe for talks about the crisis.

Timothy Geithner met German Finance Minister Wolfgang Schaeuble on the German island of Sylt, before flying to Frankfurt for talks with the European Central Bank head Mario Draghi.

Italy's bond auction saw it offload its 10-year bonds at an interest rate of 5.96%, the first time it has sold them below 6% since April.

However, Richard McGuire, a rate strategist at Rabobank, said the interest rate Italy was paying to sell its debt was still too high.

"While these sales do provide some indication of an easing of tensions at the periphery, they also show considerable further progress on this front is needed," Mr McGuire added.

  Source: BBC News