Watch CBSN Live

Italy's borrowing costs skyrocket

(AP) ROME - Italy's borrowing costs on its six-month bills jumped to their highest level since December in the face of reported German opposition to Premier Mario Monti's call for joint action to ease Europe's debt crisis.

The Italian Treasury sold off 9 billion euro in short term bonds Wednesday but the interest rate it had to pay rose to 2.96 percent from 2.10 percent a month ago. The rate was also the highest since the end of 2011 when Italy was at the forefront of Europe's debt crisis concerns.

The auction came a day after German Chancellor Angela Merkel reportedly told German lawmakers there won't be a full shared debt liability in Europe "as long as I live."

Monti has backed the idea of eurobonds as a way out of the crisis.

Meanwhile, Italy is raising up to 1.7 billion euro ($2.1 billion) to shore up the capital base of Monte dei Paschi di Siena, the world's oldest running bank.

Italy's third-largest bank has been under pressure since the European Banking Authority demanded it raise 3.2 billion euro by June. Instead of trying to raise capital, it had sought to close the gap by cost-cutting and other measures.

The government announced that the Cabinet approved the measure Tuesday.

It was in line with a request from EU leaders in October for measures to restore confidence in the banking sector.