Italian leader says EU focus must be on growth

By the Associated Press | March 13, 2012 | 2:25 PM EDT

ROME (AP) — Italian Premier Mario Monti, flanked by German leader Angela Merkel, says European Union focus must be on economic growth, even as the acute financial crisis seems to be easing.

Monti, at a news conference with Merkel after the two held private talks in Rome Tuesday, said the EU must give the same attention to growth as it has to the debt crisis.

Earlier in the day, Italy easily raised euro12 billion ($15.74 billion) in a short-term bond auction that saw borrowing costs drop again. But Monti cautioned it is no time to "relax."

Merkel said the EU must grow and be more competitive as it "defends" itself from emerging powers' economies. She praised Monti for "courageous" reforms as Italy works to ward off financial disaster.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

MILAN (AP) — Italy easily raised euro12 billion ($15.74 billion)in a short-term bond auction that saw borrowing costs drop again.

To sell euro8.5 billion in 12-month bonds, the country paid a rate of 1.4 percent. That is down from 2.23 percent in a similar sale last month and is further evidence that market pressure is easing on Italy.

The country also sold euro3.5 billion in three-month bonds, paying 0.492 percent compared with 1.8 percent at the last similar auction in September. Demand was more than twice the offer.

Analysts say the drop in Italy's borrowing rates is largely due to the European Central Bank's huge emergency loans to banks. The banks seem to be using the money to buy government bonds, which lowers the country's borrowing rates.