LONDON, Nov 16 (Reuters) – The European Central Bank eased some of the pressure on Europe’s government debt market on Wednesday, pushing Italy’s borrowing costs back below the 7 percent level viewed as unsustainable by buying up its bonds.

Equity markets were generally lower, with European shares flat. The euro itself hit a one-month low against both the dollar and the Japanese yen before recovering a bit on the ECB moves.

Italian 10-year bond yields were at 6.97 percent, having peaked well above 7 percent on Tuesday, the level generally viewed as requiring an outside bailout.

Traders said the ECB was behind the move. “They’re heavily in on Italy and Spain, 2-10 years,” one bond trader said.

Contagion from the weakest debt-ridden euro zone economies such as Greece into bigger ones such as Italy, Spain and even France is now the dominant fear for global investors.

It is no pandemic yet, but yields — how much it costs governments to borrow on financial markets — have been rising sharply almost across the board, with France now firmly in the firing line, suggesting the steps taken by policymakers and governments to contain the crisis have been nowhere near enough.

Investors question the ability of debt-ridden euro zone countries such as Italy to do what it takes to reverse their economic decline and the long-term willingness of the European Central Bank to act forcefully enough to end the crisis.

LONDON (Reuters) – Can you unscramble an omelette? That, in essence, is what euro zone leaders and the global monetary policy elite will have to do if the euro zone is to be reshaped in any semblance of an orderly manner, be it by letting Greece go or creating an inner hard core and an outer soft one.

Just how difficult this could be can be gleaned from an unusual quarter. Lord Wolfson, a UK eurosceptic, has offered a 250,000 pounds price for anyone coming up with a plan to unwind the euro zone in a non-chaotic fashion.

Not the kind of money you throw around if the answer is obvious.

The potential danger of a breakup, both to euro zone economies and the global financial system, is so great that it is often cited as a reason it will never happen.

Nonetheless, the idea that the euro zone might break up — or at least redesign itself — is no longer just the province of critics who thought it was a bad idea in the first place.

Greece’s removal from the currency bloc is the main talking point. Although European Union leaders have rallied around to say publicly it cannot happen, Eurogroup head Jean-Claude Juncker has couched his support by saying that Greece cannot stay in the euro zone at any price.

French President Nicholas Sarkozy, meanwhile, has raised the idea some euro zone countries accelerate and deepen their integration while a wider and expanding group outside the currency bloc stays more loosely connected.

LONDON (Reuters) – Can you unscramble an omelet?

That, in essence, is what euro zone leaders and the global monetary policy elite will have to do if the euro zone is to be reshaped in any semblance of an orderly manner, be it by letting Greece go or creating an inner hard core and an outer soft one.

Just how difficult this could be can be gleaned from an unusual quarter. Lord Wolfson, a UK euro skeptic, has offered a 250,000 pounds price for anyone coming up with a plan to unwind the euro zone in a non-chaotic fashion.

Not the kind of money you throw around if the answer is obvious.

The potential danger of a breakup, both to euro zone economies and the global financial system, is so great that it is often cited as a reason it will never happen.

Nonetheless, the idea that the euro zone might break up — or at least redesign itself — is no longer just the province of critics who thought it was a bad idea in the first place.

Greece’s removal from the currency bloc is the main talking point. Although European Union leaders have rallied around to say publicly it cannot happen, Eurogroup head Jean-Claude Juncker has couched his support by saying that Greece cannot stay in the euro zone at any price.

LONDON (Reuters) – Pressure eased on Europe’s government debt market on Wednesday, with Italian borrowing costs back below the 7 percent level viewed as unsustainable after the European Central Bank was seen buying up bonds.

Equity markets were generally lower, although European shares firmed, and the euro itself hit a one-month low against both the dollar and the Japenese yen.

Italian 10-year bond yields were at 6.85 percent, having peaked well above 7 percent on Tuesday, the level generally viewed as requiring an outside bailout.

Traders said the ECB was behind the move. “They’re heavily in on Italy and Spain, 2-10 years,” one bond trader said.

Contagion from the weakest debt-ridden euro zone economies such as Greece into bigger ones such as Italy, Spain and even France is now the dominant fear for global investors.

It is no pandemic yet, but yields have been rising sharply almost across the board, with France now firmly in the firing line, suggesting the steps taken by policymakers and governments to contain the debt crisis have been nowhere near enough.

Investors question the ability of debt-ridden euro zone countries such as Italy to do what it takes to reverse their economic decline and the long-term willingness of the European Central Bank to act forcefully enough to end the crisis.

LONDON (Reuters) – Pressure eased on Europe’s government debt market on Tuesday, with Italian borrowing costs back below the 7 percent level viewed as unsustainable after the European Central Bank was seen buying up bonds.

Equity markets were generally lower, although European shares firmed .FTEU3, and the euro itself hit a one-month low against both the dollar and the Japanese yen.

Italian 10-year bond yields were at 6.85 percent, having peaked well above 7 percent on Tuesday, the level generally viewed as requiring an outside bailout.

Traders said the ECB was behind the move. “They’re heavily in on Italy and Spain, 2-10 years,” one bond trader said.

Contagion from the weakest debt-ridden euro zone economies such as Greece into bigger ones such as Italy, Spain and even France is now the dominant fear for global investors.

It is no pandemic yet, but yields have been rising sharply almost across the board, with France now firmly in the firing line, suggesting the steps taken by policymakers and governments to contain the debt crisis have been nowhere near enough.

Investors question the ability of debt-ridden euro zone countries such as Italy to do what it takes to reverse their economic decline and the long-term willingness of the European Central Bank to act forcefully enough to end the crisis.

LONDON (Reuters) – Financial markets on Monday greeted the appointments of technocratic leaders in euro zone debt hot spots Italy and Greece with cautious optimism, boosting stocks.

Italian bonds, which were hammered last week in the latest phase of the euro zone debt crisis, eased away from crisis levels, although a big test lay ahead with the sale of 3 billion euros of five-year government bonds.

The euro fell, however, after getting a boost in Asian trading.

Italy’s president appointed former European Commissioner Mario Monti on Sunday to head a new government with the task of restoring market confidence in the euro zone’s third largest economy, whose debt burden is too big for the bloc to bail out.

Meanwhile in Greece, Lucas Papademos, a former European Central Bank vice president, has been sworn in as prime minister and is under pressure to implement radical reforms.

“We have now got two strong characters who are prepared to put public interest ahead of personal interest and they have a lot of goodwill to start with. The challenge for them now is to implement the fiscal austerity and budget reforms,” said Mike Lenhoff, chief strategist at Brewin Dolphin.

World stocks as measured by MSCI were up 0.2 percent, leaving them around 7 percent down for 2011.

LONDON (Reuters) – Financial markets on Monday greeted the appointments of technocratic leaders in euro zone debt hot spots Italy and Greece with cautious optimism, boosting stocks.

Italian bonds, which were hammered last week in the latest phase of the euro zone debt crisis, eased away from crisis levels, although a big test lay ahead with the sale of 3 billion euros of five-year government bonds.

The euro fell, however, after getting a boost in Asian trading.

Italy’s president appointed former European Commissioner Mario Monti on Sunday to head a new government with the task of restoring market confidence in the euro zone’s third largest economy, whose debt burden is too big for the bloc to bail out.

Meanwhile in Greece, Lucas Papademos, a former European Central Bank vice president, has been sworn in as prime minister and is under pressure to implement radical reforms.

“We have now got two strong characters who are prepared to put public interest ahead of personal interest and they have a lot of goodwill to start with. The challenge for them now is to implement the fiscal austerity and budget reforms,” said Mike Lenhoff, chief strategist at Brewin Dolphin.

World stocks as measured by MSCI .MIWD00000PUS were up 0.2 percent, leaving them around 7 percent down for 2011.

LONDON (Reuters) – Financial markets on Monday greeted the appointments of technocratic leaders in euro zone debt hot spots Italy and Greece with cautious optimism, boosting stocks.

Italian bonds, which were hammered last week in the latest phase of the euro zone debt crisis, eased away from crisis levels, although a big test lay ahead with the sale of 3 billion euros of five-year government bonds.

The euro fell, however, after getting a boost in Asian trading.

Italy’s president appointed former European Commissioner Mario Monti on Sunday to head a new government with the task of restoring market confidence in the euro zone’s third largest economy, whose debt burden is too big for the bloc to bail out.

Meanwhile in Greece, Lucas Papademos, a former European Central Bank vice president, has been sworn in as prime minister and is under pressure to implement radical reforms.

“We have now got two strong characters who are prepared to put public interest ahead of personal interest and they have a lot of goodwill to start with. The challenge for them now is to implement the fiscal austerity and budget reforms,” said Mike Lenhoff, chief strategist at Brewin Dolphin.

World stocks as measured by MSCI .MIWD00000PUS were up 0.2 percent, leaving them around 7 percent down for 2011.