Even as Cyprus prepares to open its banks on Thursday, investors' concerns shifted back to Italy.
US Treasuries rallied and the euro weakened to a four-month low against the dollar on Wednesday as Italy's Democratic Party leader Pier Luigi Bersani said there was no possibility of a broad coalition to end the deadlock caused by last month’s elections. Italian five-year yields rose 25 basis points, the most in a month, to 3.58 percent.
Disappointing data from the euro area added to the negative sentiment in markets. A report from the European Commission on Wednesday showed that its economic sentiment indicator for the region fell to 90.0 in March from 91.1 in February.
Even US data were not very positive on Wednesday. Pending home sales fell 0.4 percent February. However, it remained at the second highest level since April 2010.
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