Business

Italian debt fears intensify

Ms Lagarde had previously called for the fund's lending capacity to be increased to $1 trillion, which would have entailed raising about $600 billion in new pledges from members.
Ms Lagarde had previously called for the fund's lending capacity to be increased to $1 trillion, which would have entailed raising about $600 billion in new pledges from members. Kaiser Nelson

MARKET nerves about the Spanish economy showed signs of spreading to Italy yesterday as Rome saw its medium-term borrowing costs spike.

Italy sold AU$2.9 billion in three-year debt at 3.89 per cent yesterday, higher than the 2.76 per cent it was forced to pay at a similar auction last month.

Demand for the debt issue was also muted.

Italy's benchmark 10-year bond yields have been rising in recent weeks as investor concerns about the solvency of struggling southern European nations have flooded back, although interest rates eased slightly yesterday to 5.4 per cent.

Investor fears have also been exacerbated by mixed signals from the European Central Bank about whether it might intervene in debt markets to keep eurozone borrowing costs down.

The managing director of the International Monetary Fund, Christine Lagarde, yesterday urged the ECB to show "continued support" for the eurozone. In a speech to the Brookings Institution in Washington, she also called on IMF member states to increase the fund's resources when they gather for the annual spring meeting next week.

However, Ms Lagarde downplayed expectations of the final figure that might result.

She said: "The needs now may not be quite as large as we had estimated earlier this year."

Ms Lagarde had previously called for the fund's lending capacity to be increased to $1 trillion, which would have entailed raising about $600 billion in new pledges from members.

Reflecting the general market concern about rising sovereign borrowing levels, the OECD yesterday called on industrialised nations to cut their national debts to 50 per cent of GDP over the coming decades to create a "safety margin" against future crises.

Eurozone states have seen their debt-to-GDP ratios spiral since the 2008 financial crisis.

But to hit this target Japan and the United States would have to enact the deepest cuts. Japan would need fiscal tightening worth more than 12 per cent of GDP a year to reach the 50 per cent mark by 2050.

The US would need a consolidation of close to 10 per cent a year.

Topics:  bonds contagion italy sovereign debt crisis spain


Stay Connected

Update your news preferences and get the latest news delivered to your inbox.

New breed of laws

PAWFECT COMPANION: Isaac dog owners like Curtis Teale, pictured with husky Luca, will need to abide by new breeding laws that start today.

New dog breeding laws throughout Queensland will begin today.

Serving up a tasty fundraiser

YARNS APLENTY: Bush poet Murray Hartin will entertain diners at the Springsure State School's Paddock to Plate 2017 dinner.

Springsure State School is serving up a yummy fundraiser.

Let's seal our future prosperity

KNEE DEEP: Matthew and Bernadette Paine's daughter Grace demonstrates how the heavy traffic load causes incredible wear and tear on Springsure-Tambo Rd.

Region outgrows dirt road

Local Partners

The 'pretty boy' miner wowing the world of fashion

FROM being called "pretty boy", to hiding his passion from his father to the point he was almost listed as a missing person, his career change hasn't been easy.

What to expect at Birds of Tokyo's Ipswich gig

The band will perform at the Racehorse Hotel on Friday.

BAND member Glen Sarangapany talks music, pub grub and doing shoeys

What public holidays are left in 2017

Ipswich residents will get the day off tomorrow for the show.

IPSWICH residents will get tomorrow off for the show

Caitlyn comes home to launch debut album

Gympie's Caitlyn Shadbolt will launch here debut album Songs On My Sleeve at an exclusive all-ages concert in Gympie on Friday, May 26.

Win tickets to Caitlyn's album launch

Ben Stiller and Christine Taylor split after 17 years

BEN Stiller and his wife Christine Taylor have called it a day in a joint announcement.

Why The Voice hasn't produced a star

Boy George responds to Brittania Clifford-Pugh's heart-warming message.

It's the industry, not the show, says Boy George

These actors hated their movies and didn’t mind admitting it

Channing Tatum and Marlon Wayans in a scene from GI Joe: The Rise of Cobra.

Every year, Hollywood blesses us with plenty of God awful movies.

Miranda Kerr and fiance hang up backyard tent for wedding

The decorators and caterers are arriving for the final preparations for the wedding of Miranda Kerr and Evan Spiegel. Pictures: Splash

Evan Spiegel and Miranda Kerr are set to marry today

Book review: Mia Freedman's book meets her critics head on

I appreciated Freedman's blunt honesty in the book

Model Bella Hadid's see-through dress shocks in Cannes

US model Bella Hadid attends the Cinema Against AIDS amfAR gala 2017 held at the Hotel du Cap, Eden Roc in Cap d'Antibes, France, 25 May 2017.

It’s like she’s become addicted to shock value.

Man's amazing comeback from monster crisis

Pat O'Driscoll agents Penny Keating and Doug Webber sold 56 Agnes St, The Range at auction over the weekend.

NOT long ago, he sold his possessions to pay staff. Now he's back.

Report reveals progress on $319m airport upgrade

Aerials of the Sunshine Coast.Jetstar plane in front of the Susnhine Coast terminal, Sunshine Coast Airport.

Over two dozen government approvals needed for airport expansion

Lost dough leaves sour taste after company collapse

Kathleen and John Mahoney from Sugar and Spice Bakery were stung after the collapse of Cantro Pty Ltd and are still owed money.

Supermarket operator collapse leaves sour taste for bakery

Open for inspection homes May 25-31

Check out this weekend's homes open for inspection

How Toowoomba house prices compare in Australia

For sale sign in front of home.

Here's what $700,000 will buy you in Toowoomba, Brisbane and Sydney

Ready to SELL your property?

Post Your Ad Here!