Italy leads markets lower

EUROPEAN markets fell for a third consecutive day yesterday as the eurozone crisis spotlight switched to Italy.

News of the pending resignation of Italy’s prime minister Silvio Berlusconi did little to calm investors, as the country’s cost of borrowing escalated to record proportions. For the first time since the introduction of the euro, Italian bond yields — or the interest rate demanded by debt buyers — exceeded the 7% mark with talk rising that Italy could prove too big to bail out.

The country’s benchmark index — the Milan-based Borsa Italiana — fell by under 4%, or over 590 points.

“This is a negative spiral in terms of Italian debt. We already were in a perilous situation. The level of debt in Italy is a very, very big problem. In spite of the good news of changes in Italian leadership, the problem is deeper,” one Paris- based analyst told the Bloomberg news agency.

In Dublin, the ISEQ fell just under 1%.

Overseas, the DAX index in Frankfurt, was the main faller of the big three — down by over 2.2%.

In Paris, the CAC-40 index was down by 2.17% to just over the 3,000 point mark. In London, the FTSE-100 fell by 1.92%.

Additional reporting by Reuters