Italy/Germany bond yield spread hit lowest since July 2011

MILAN Tue Feb 18, 2014 9:23am EST

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MILAN Feb 18 (Reuters) - The gap between Italian and German 10-year government bond yields fell below 190 basis points on Tuesday to hit its lowest level since July 4, 2011, before the country got engulfed in a euro zone-wide sovereign debt crisis.

Italian 10-year borrowing costs fell to 3.59 percent on Tuesday from 3.70 percent on Friday.

Dealers say rating agency Moody's move to raise its outlook on Italy's sovereign debt to stable from negative last Friday, and the expectation of a reform drive from Matteo Renzi's new government, caused the fall in the spread. (Reporting by Sara Rossi, writing by Francesca Landini)