The difference in interest rates on Italian and German bonds closed at 349 basis points after peaking at 355 during the day. The yield on Italian ten year bonds was 5.05%. On Friday, the BTP-Bund spread started the day in the 530's.
Morgan Stanley came out with a report Monday that called Italian Premier Mario Monti "a good student" with an "ambitious fiscal consolidation&and structural reform agenda". The analysts said Italy has the choice between accepting his agenda or taking higher interest rates and the risk of European rescue aid, which would come with reforms imposed from outside.
If the BTP-Bund spread were at pre-crisis levels, Italian businesses and families would be able to pay interest rates 120 to 170 basis points less than they do now, the Bank of Italy said in a report issued Monday.
The spread between Spanish bond rates and the German benchmark closed at 412 basis points Monday, edging slightly higher than last week. The yield on Spanish ten year bonds closed at 5.68%.
European markets closed down on Monday. The Madrid Ibex 35 (-1.12%), Paris CAC 40 (-0.94%), Milan's FTSE MIB (-0.78%), London FTSE-100 (-0.24%), Frankfurt DAX (-0.54%) all lost ground Monday.