Italy's one-year funding costs plunged to the lowest level since the introduction of the euro as the European Central Bank's rate reduction boosted demand for debts with higher return.
At an auction on Friday, the treasury raised EUR 7 billion of 365-day bills at a cost of 0.70 percent. The yield declined from 0.92 percent at a similar issue in the previous month.
Investors bid for 1.16 times the amount offered, but slightly down from 1.64 times last month. The treasury also sold EUR 3 billion flexible T-bills, with 219 days left for maturity.
The ECB last week reduced the main refinancing rate by 25 basis points to a record low 0.50 percent. The previous change in euro area interest rates was a quarter-point reduction in July 2012.
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