Italy 2-yr borrowing costs at peak since Dec 2011

MILAN May 28 (Reuters) - Italian two-year borrowing costs rose to their highest since December at a sale of zero-coupon paper on Monday as the prospect of a possible Greek euro exit and Spain's banking woes continued to weigh on the debt of weaker euro zone borrowers.

Italy sold 3.5 billion euros of a new May 2014 zero-coupon bond, the top of its planned target range.

A month ago and before inconclusive Greek electoral results soured euro zone sentiment, Italy had sold a similar bond, due in January 2014, at an average 3.36 percent yield.