Yves Logghe, Associated Press
ROME — Italy confirmed reports Tuesday that the finance minister has met with China's sovereign wealth fund amid speculation that Rome is looking to persuade Beijing to buy its bonds or invest in its companies.
The news sent the Milan stock market higher on the open, following market tensions across Europe on Monday. But the rebound was short-lived, and by stocks across Europe, including Milan, were down.
Bond prices likewise received little support from the news especially after the country had to pay a euro-era high interest rate in a five-year bond auction.
Though the Italian Treasury raised €3.86 billion ($5.27 billion) from the sale of five-year bonds, it had to pay an interest rate of 5.6 percent. That was the highest rate it has had to pay since the euro was established in 1999 and marked a fairly hefty rise from the previous auction's equivalent of 4.9 percent.
Italy, the eurozone's third largest economy, is trying to avoid becoming the next victim of Europe's debt crisis.
Premier Silvio Berlusconi flew to Brussels on Tuesday for talks with European Union President Herman Van Rompuy ahead of a key Parliament vote.
Berlusconi's government recently unveiled austerity measures that seek to slash spending by more than €54 billion ($70 billion) over three years. The measures will be put to a vote of confidence in the lower house of parliament for final approval Wednesday, Berlusconi said.
The European Central Bank has bought Italian bonds in the open market to keep their yields — an indication of the rates at which the country would be able to borrow — down.
But Rome appears to be looking farther away, too.
A spokesman for Finance Minister Giulio Tremonti confirmed the meeting with the chairman of China Investment Corp., Lou Jiwei, but declined further comment.
The Wall Street Journal and the Financial Times said the meeting took place last week in Rome, without citing sources. Reports said the meeting also included officials of China's foreign currency regulator and the Cassa Depositi e Prestiti, an Italian government investment vehicle.
CIC was created in 2007 to invest a portion of Beijing's $3.2 trillion in foreign reserves, the bulk of which are held in safe but low-earning assets such as U.S. Treasury debt. The fund says it has assets of $409.6 billion, which includes stocks in a wide array of major Western companies.
"Europe will continue to be one of China's main investment markets," said Foreign Ministry spokeswoman Jiang Yu at a regular news briefing. "We will also expand financial and economic cooperation and investment cooperation with European countries to jointly address the financial crisis."
Beijing hopes eurozone countries will "take effective measures to ensure the safety of China's investments," Jiang said.
Associated Press Writer Joe McDonald in Beijing contributed to this report.
- Here's a quiz to test your Star Wars...
- LA man builds small home for homeless lady
- Have you seen 'Age of Ultron'? Here are 50...
- Floyd Mayweather wins decision over Manny...
- 'Avengers' sequel is second biggest US opener...
- Vonn says relationship with Woods is over
- 18 of the best made-up words from children's...
- Britain has a new princess — and...
- Religious liberty issues dog Supreme... 45
- Vermont Sen. Bernie Sanders: 'I am... 40
- Rage to relief in Baltimore as 6... 40
- Defending the Faith: Going up to Jerusalem 25
- Michelle Singletary: Stop picking on... 22
- AP-GfK Poll: Nuanced views on gay... 16
- Governor, legislators leave 'baggage'... 13
- Many 8th graders score poorly on US... 12