Italy's borrowing costs rise ahead of elections

Italy's borrowing costs rise slightly in bond auction amid political jockeying for Feb. vote

Associated Press
Italy's borrowing costs rise ahead of elections
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Italian Premier Mario Monti gestures as he speaks during a news conference in Rome, Sunday, Dec. 23, 2012. Italy's caretaker Premier Mario Monti said Sunday he won't run in February elections, but if political parties that back his anti-crisis agenda ask him to head the next government he would consider the offer. Monti ruled out heading any ticket himself, saying "I have no sympathy for 'personal' parties." At a news conference, Monti made clear he was spurning an offer from his predecessor Silvio Berlusconi to run on a center-right election ticket backed by the media mogul, citing Berlusconi's heavy criticism of his economic policies. (AP Photo/Alessandra Tarantino)

ROME (AP) -- Italy's borrowing costs rose slightly Thursday in an auction of six-month bonds held in the wake of Premier Mario Monti's resignation and uncertainty about his participation in the campaign for February's elections.

The Italian Treasury sold the €8.5 billion ($11.24 billion) in paper Thursday, but the interest rate charged on the bond was 0.949 percent, up from 0.919 percent in November's auction. Demand was 1.57 times the amount on offer.

Italy's borrowing costs have fallen over the past year thanks to a combination of the reforms introduced by Monti's technical government and the European Central Bank's offer to buy up bonds in countries struggling with their debts. However, Monti resigned last week after Silvio Berlusconi's party yanked support for his technical government. He remains on in a caretaker role.

In his end-of-year press conference, Monti excluded running for office but said he would consider leading the next government if politicians who back his reform agenda request it. In the days since, he has published a detailed, 25-page political platform and urged like-minded politicians to back it. He sent his first tweet boasting of having saved Italy "from disaster" and calling for politics to be renewed.

All of which has led to widespread speculation that it's just a matter of time before he becomes an official candidate, in one form or another. Italian newspapers on Thursday were full of speculation about Monti's behind-the-scenes jockeying, whether he'll head a ticket of likeminded politicians, his role in selecting other candidates to run, possible alliances and feuds that will be formed in the next two months.

"No one understands if he'll remain neutral, if he'll head a Monti ticket linked to other like-minded tickets, or if he will lead a single ticket that absorbs all the centrist parties," analyst Luca Ricolfi wrote in Thursday's La Stampa, adding that it is unlikely that Monti himself has decided on what course to take.

Among Monti's most enthusiastic backers are pro-Vatican politicians, including those from the former Christian Democrat party. The latest show of support for a Monti premiership came Thursday from the Vatican's newspaper, L'Osservatore Romano, which said it embraced Monti's call for "the most noble" form of politics to work for the common good.

In his Christmas greeting Tuesday, Pope Benedict XVI's Christmas urged Italian voters to keep high values in mind when making choices. This was immediately read as tantamount to a papal endorsement for Monti in a country where the Vatican wields significant influence in Italian politics.

The center-left Democratic Party is ahead in the polls with about 30 percent of the vote, and is eager to see Monti fade from the political scene for fear that he will take away votes. Berlusconi's People of Liberty party trails in the polls and is even more openly hostile to Monti's jockeying after the he spurned Berlusconi's offer to lead a center-right ticket.

The Democratic Party got a boost Thursday with the decision by the country's respected anti-mafia prosecutor, Pietro Grasso, to run for office under the party ticket. The ANSA news agency said Grasso would make the announcement official at a press conference Friday with the center-left's candidate for premier, Pierluigi Bersani.

Berlusconi, meanwhile, has been on TV over the past few days, promising that if elected he would remove the property tax on primary residences that Monti re-imposed as part of his austerity measures. Berlusconi had cut the unpopular tax soon after taking office in 2008, at the start of his third stint as premier.

Monti has defended the tax as both necessary and reasonable, given that most industrialized countries impose such a tax on homeowners' primary residence.

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Frances D'Emilio contributed to this report from Rome.

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