Italy sells bonds as workers strike over austerity

[December 12, 2011]  ROME (AP) -- Italy's borrowing costs eased in a bond auction Monday, but worries about the country's ability to manage its debt and enforce spending cuts persisted as unions called a strike against the new government's austerity measures.

Italy easily sold euro7 billion ($9.4 billion) in 12-month bonds at an interest rate of 5.92 percent, down from a record of 6.087 percent hit last month, when concerns about the country's future were at a high. The auction was oversubscribed 1.92 times.

The sale was held on the second "bond day" sponsored by the Italian Banker's Association, which allowed private buyers to snap up public debt without the usual commission. Analysts said the move -- aimed at engendering confidence in the nation's debt -- would help retail sales of the bonds.

The Italian government's efforts to lower its debt were coming under fire from unions, however.

Workers joined rallies and a nationwide strike in several labor sectors to protest pension reforms. It was the first in a series of walkouts called over the emergency austerity measures which Premier Mario Monti insists are vital to avert financial disaster.

Metalworkers, including many on assembly lines at Fiat's auto factories, were staging an eight-hour strike, while others were planning to walk off the job three hours before the end of the shift.

Also on strike were workers at La Scala, the Milan opera house that was forced to cancel a concert, and typographers at Italian newspapers and web sites.

Public transport wasn't involved in Monday's strike, but their union leaders called walkouts for Thursday and Friday. Other public sector employees were set to walk off the job on Dec. 19, while bank workers have a strike call for Friday.

The union leaders say the government's austerity measures hit too hard at pensioners and workers and not hard enough at the wealthy. A rally was called for Monday afternoon outside Parliament, which is expected to pass the measures by Christmas.

"Fairness, fairness," shouted workers marching in Florence.

In Genoa, hundreds of workers, joined by students protesting school budget cuts, were marching toward a rally site. Fiat workers joined hundreds of other blue-collar workers, students and youths in a march in Turin, hometown to the automaker, which is the country's largest private sector employer.

Monti's government of fellow non-elected technocrats, which took office last month, is urging Parliament to swiftly pass his rescue plan, which includes investing about a third of the euro30 billion ($40 billion) in austerity savings in infrastructure and other projects to try to revive economic growth.

Labor Minister Elsa Fornero, who was among government officials meeting with union leaders on Sunday night, has said some pension reforms might be softened, but that overall spending cuts must remain for the country to regain credibility on financial markets.

"We're working to make the (emergency) package fairer," said a centrist party leader, Lorenzo Cesa. Lawmakers were considering raising the minimum level of pensions that would be eligible for periodic increases tied to inflation, he told Sky TG24 in an interview. Monti's measure freezes such raises for all but the very lowest pensions.

Efforts were also under way to soften the blow of the revival of a property tax that Monti's predecessor, media mogul Silvio Berlusconi, had abolished. Lawmakers were considering making homeowners with large families play less tax, Cesa said.

[Associated Press; By FRANCES D'EMILIO and COLLEEN BARRY]

Barry contributed from Milan.

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