Economic news

Italy’s crisis has a harmful effect on European markets

Italy’s deepening political crisis sparked selling on Europe’s markets, as the euro fell to the level last recorded 11 months ago, and as short-term cost of borrowing soared.

Investors are bothered by the highly probable re-elections in the third largest economy of the euro zone, which could become a vote on the country’s membership in the Union.

Returns on Italy’s short-term bonds, reflecting political risk, leaped 150 basis points, reaching the top level since the end of 2013, which is also the sharpest move in over 25 years.

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