Italy borrowing rates rise amid political tensions

Italy's borrowing costs rose in a sale of 12-month treasury bills on Wednesday that raised 11.5 billion euros ($15.2 billion), signalling investor unease amid growing political tensions over Silvio Berlusconi's fate.

The Treasury sold 8.5 billion euros in 12-month bills at a rate of 1.340 percent, compared to 1.053 percent at the last similar operation on August 12, the Bank of Italy said.

It also sold 3.0 billion euros in flexible bonds at a rate of 0.509 percent.

Italy's 10-year bond yields rose above those of Spain for the first time since March 2012 on Tuesday, amid fierce debate in Italy over whether former premier Berlusconi should be ousted from parliament following his conviction for tax fraud.

The battle over the billionaire's political future has sparked fears over the stability of Prime Minister Enrico Letta's coalition government.

The country's benchmark 10-year yields have inched up 0.13 percentage points since the end of August, when the former premier said that his People of Freedom (PDL) party may pull the plug on the government if he is voted out of parliament.

The rate remains nearly 3.0 percentage points lower than the record high of 7.48 percent reached in November 2011, when Berlusconi was forced to resign as premier amid fears the debt-laden country would be submerged by the eurozone debt crisis.