The price of Italian bonds remained unsettlingly high today, pressuring stock markets across Europe and Wall Street.
There were hopes last week that the resignation of Italian prime minister Silvio Berlusconi would go along way toward easing Europe’s political problems and ultimately halt the roiling debt crisis.
But Italy paid a 6.29 percent yield on the 3 billion euros worth of 5-year bonds it sold Monday.
That’s the highest rate that Italy has paid on its debt since 1997, according to the BBC.
Yields over 7 percent led to bailouts of Greece, Ireland and Portugal, but Italy is seen as too big for the European Union to rescue, making the country the debt crisis’ current pivot point.
The FTSE 100 in London closed down 0.5 percent at 5,519.04, while the CAC 40 in Paris finished down 1.3 percent at 3,108.95. The DAX in Frankfurt fell 1.2 percent to 5,985.02 and the FTSE MIB in Milan slumped 2 percent to 15,464.45 points.
Fashion and luxury stocks were mixed in Europe. Marcolin fell 2.2 percent to 3.85 euros, and Hugo Boss dropped 4.7 percent to 64.95 euros following news that Permira had cut its stake in the company.
Those that rose included Burberry, which was up 3.2 percent at 14.30 pounds, and Ferragamo, which closed up 3.2 percent at 12.27 euros, following news of an 85 percent rise in its net profits in the first nine months of the year.
The euro traded for $1.38 Monday, while the pound traded for $1.61.
On Wall Street, the S&P Retail Index performed comparatively well, slipping just 0.2 percent, or 1.16 points, to 547.06, but the Dow Jones Industrial Average fell a slightly steeper 0.6 percent, or 74.70 points, to 12,078.98.
The retail decliners included J.C. Penney Co. Inc., which fell 2.8 percent to $32.98 after special charges led it to heavy third-quarter losses; Sears Holdings Corp., down 2.8 percent to $72.25, and Aéropostale Inc., off 1.7 percent to $16.72.
Investors are also fretting over a possible recession in Europe, which could cause troubles for the global economy as well.
Eurostat, the European Union’s statistics agency, said industrial production in the Euro area fell 2 percent in September, compared with August, and fell 2.2 percent compared with a year earlier.
Although the decline was not as severe as some had forecast, commodities stocks such as Vedanta Resources and engineering solutions firm Weir Group were among the biggest decliners in the FTSE 100.