Shares slump as Italy's borrowing costs soar

Share prices across Europe are falling while Italy's borrowing costs have hit new record highs.

The yield on Italy's 10-year bonds surged to a high of 7.40%, up 0.82% from the previous day.

That is despite Prime Minister Silvio Berlusconi's announcement that he plans to stand down once his parliament has approved his economic reforms.

The European Central Bank has reportedly been buying Italian bonds this morning in order to drive the yields down.

Chris Curran from Delta Index has said rates above 7% are seen by many economists as "unsustainable".

Katie Martin, news editor for currencies at Dow Jones news-wires, has said it is going to become impossible for Italy to raise money on the markets.