Markets drop as Italian bond yields hit new records

Markets moved lower on Monday as fears over Greece and Italy remained despite the imminent formation of a Greek coalition government.

After falling as much as 1.7% in early trading, the FTSE 100 recovered to stand down 0.7% at 5,488 by the mid-morning amid rumours Italian prime minister Silvio Berlusconi will step down. Germany's Dax and France's Cac 40 also erased most of their 1.7% losses before the reports were denied and losses deepened once more. Earlier, Italian 10-year bond yields moved more than 25 basis points higher to a record 6.63%, with the spread over German bunds also moving to a fresh euro-era record. EU finance ministers will meet late today in Brussels as Berlusconi attempts to face off the late...