15 Jun 2012

Borrowing costs keep rising for Spain and Italy

5:02 am on 15 June 2012

Spain and Italy have promised new measures to repair their public finances as their soaring borrowing costs raise new alarm ahead of the election in Greece on Sunday.

Spain's 10-year bond yield hit its highest level on Thursday since Spain joined the euro, topping 7%.

That is seen as the danger level at which Greece, Ireland and Portugal were driven to seek international rescues.

The rising Spanish interest rate comes despite last weekend's euro zone agreement to lend Madrid up to 100 billion euros.

Spain's Economy Minister says he's convinced his country will continue to take more measures in the coming days and weeks to help bring the rate down.

Meanwhile, Italy said it will seek to cut 5 billion euros in state administration spending this year instead of a previously announced 4.2 billion euros.

Italy's three-year borrowing costs rose to 5.3% at auction on Thursday, the highest since December.