European markets close down, bond spreads rebound

The spread between Italian 10-year-bonds and the benchmark German bund rose more than 13 basis points Monday after reaching a post-March low on Friday. The Italian-German bond spread closed at 343 basis points on Monday, with Italian 10 year bonds yielding 5%. The difference between Spanish 10-year-bonds and the German benchmark also inched upward. The yield on Spanish 10 year bonds returned to 6% for the first time since the European Central Bank announced its bond acquisition programme. Italian and Spanish bond spreads and interest rates are important gauges of market confidence in the countries' ability to pay down their unwieldy national debts. European stock markets closed down or flat Monday. The Milan FTSE MIB (-0.93%) closed at 16.470 points on sluggish trading of 2.2 billion euros. Italian regulator CONSOB said the Milan bourse had lost significant economic heft in a statistics bulletin Monday. The total capitalization of companies listed on the Milan stock exchange sank to 327.1 billion euros at the end of June, compared to 369.3 billion euros at the end of March. Compared to Italy's gross national product (GDP), the total market cap narrowed to 21% in June, down from 27.4% at the same time last year. The Paris CAC 40 (-0.78%) and London FTSE-100 (-0.37%) also closed in negative territory. The Madrid Ibex (-0.08%) and Frankfurt DAX (-0.11%) were nearly unchanged.