LONDON, Oct 29 (Reuters) - Italian bond yields fell sharply on Monday, with 10-year borrowing costs hitting a one-week low following a decision by ratings agency Standard & Poor’s to leave Italy’s sovereign rating unchanged.
S&P on Friday left the rating at BBB, two notches above junk, but lowered the ratings outlook to negative from stable.
Relief that there was no ratings downgrade boosted a battered bond market.
Italy’s 10-year bond yield fell to a one-week low at 3.345 percent and was last down 9 basis points on the day.
That fall narrowed the gap over top-rated German bond yields to 299 bps from around 306 bps late Friday. (Reporting by Dhara Ranasinghe Editing by Raissa Kasolowsky)