Italian yields skyrocket on 12-month bond auction

(AP) MILAN - Italian yields on 12-month bonds skyrocketed to near December levels, wiping out the benefits of Premier Mario Monti's nearly seven-month government as Spanish contagion spreads.

Italy paid 3.972 percent interest rates - up from 2.34 percent last month - to sell 6.5 billion euro ($8.12 billion) in 12-month paper. The bond auction enjoyed strong demand.

The sale was a warm-up for Thursday's weightier longer-term paper auction.

Spain's decision over the weekend to seek a bailout for its banks has heightened pressure on Italy to speed its reforms and hold steady on austerity.

Monti earlier Wednesday urged parliament to accelerate passage of reforms to assure international markets that the eurozone's third largest economy will follow words with actions.