Italy engulfed in debt crisis

Italian 10-year bond yields have hit a new euro-era high of 6.64 per cent, on fears over mounting political uncertainty.

Italy has come under fresh market pressure to deal with its mountain of debts as the country's cost of borrowing jumped to a euro-era high.

The yield on Italy's 10-year bonds jumped another 0.33 percentage point on Monday to 6.64 per cent, its highest level since the euro was established in 1999.

"Greece has pulled back from the abyss but it is still very much wobbling on the edge and what we are seeing now is Italy fast approaching Greece in terms of concerns" - Louise Cooper, BGC financial analyst

Italy, which is the eurozone's third-largest economy and has debts worth 120 per cent of national income, is increasingly at the forefront of investor concerns over Europe's debt crisis.