Forexpros - Italy saw borrowing costs collapse at an auction of five- and ten-year government bonds Thursday, as market players continued to focus on developments surrounding the euro zone’s ongoing debt crisis. Italy’s Treasury sold EUR2.98 billion worth of ten-year debt maturing in November 2022 at an average yield of 4.45%, the lowest since November 2010 and down from 4.92% at a similar auction last month. The “bid-to-cover� ratio was 1.18, down from 1.43 at a similar auction in October. Rome also sold EUR3 billion of five-year government bonds maturing in November 2017 at an average yield of 3.23%, the lowest since October 2010 and down from 3.80% at a similar auction last month. The yield on Italian 10-year bonds stood at 4.51% following the auction. Bond auctions have become key drivers of risk sentiment in recent months, as traders attempt to gauge the ability of indebted euro zone nations to fund themselves. Meanwhile, the euro held on to gains against the U.S. dollar, with EUR/USD adding 0.25% to trade at 1.2985. European stock markets remained higher. Italy FTSE MIB Index rallied 1.6%, the EURO STOXX 50 rose 1%, France’s CAC 40 added 1%, Germany's DAX climbed 0.8%, while London’s FTSE 100 advanced 0.9%.

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