Eurozone crisis fears continue as Italy forced to pay higher rates to borrow

The Italian government was forced to pay the highest borrowing costs for 11 years in a bond auction that underscored market fears that a new phase of the European debt crisis is set to be unleashed.

Italy successfully sold €2.7bn (£2.4bn) of 10-year bonds but only after yields had soared to 5.77pc – compared to 4.94pc at the last auction a month ago. Traders argued that last week's €159bn Greek bail-out was not enough to prevent contagion to the bigger European economies.

The Euro Crisis: Big Rescue, Big Doubts

This time is different. Really. That was the message from European leaders after the 11th debt-crisis summit in 17 months produced an additional €109 billion ($157 billion) in loans for deficit-bloated Greece, easier aid terms for Ireland and Portugal, and a retooled bailout fund to prevent markets from trashing Spain and Italy as well. The euro, as well as the distressed countries’ bonds, rallied.

Greece credit rating cut by S&P on 'likely default'

Ratings agency Standard & Poor's has cut Greece's credit rating, saying that eurozone plans to restructure the country's debts would constitute a "selective default".

Under the plans, Greece would be given longer to repay its debts and private investors would take a hit.

S&P said it had cut Greece's rating to CC from CCC.

UPDATE: Schaeuble Says Single Summit Can't Solve Debt Crisis

LONDON (Dow Jones)--The euro zone's debt crisis isn't over and discipline needs to be maintained to stop it spreading further, according to German Finance Minister Wolfgang Schaeuble.

In a letter to party comrades in the Bundestag, seen by Dow Jones Newswires, Schaeuble warned "it would be a mistake to think that the crisis of trust in the euro area can be solved by a single summit," although he argued that last week's decisions by heads of government were "an important step towards overcoming the Greek crisis and the preservation of financial stability."

German consumer confidence slips on euro debt crisis worries

BERLIN — A new survey finds that German consumer confidence is slipping amid unease about the potential impact of the eurozone debt crisis.

The GfK research group said Tuesday its forward-looking confidence indicator for August stands at 5.4 points. It is down from 5.5 in July, a figure that GfK revised down from its initial forecast of 5.7.