Italy’s Monti calls for more firepower

Italy's Prime Minister Mario Monti called for significantly more firepower for the euro zone's bailout fund after a bond auction did little to ease concerns over how the country would finance public spending in the next few months.

"Auctions held yesterday and today went rather well, but the financial turbulence absolutely isn't over," Monti said during a traditional end-year press conference. To calm markets further, "most of the work needs to be done in Europe," he said.

He said the European Financial Stability Facility needs "significantly greater" resources but refused to quantify how much more the fund needed.

Italy sold 7 billion euros ($9 billion) of bonds today in thin holiday markets, just above the mid-point of its target range.

Since then the ECB has let banks borrow all they sought at its first-ever tender of three-year funds, helping demand for short-term debt.

Italian six-month borrowing costs halved at an auction yesterday, following a similarly dramatic drop in Spanish short-term yields on the eve of the ECB's tender.

But there is little evidence that the ECB money has found its way to longer-term bonds

Italy raised nearly 18 billion euros this week. The sales will settle in January and help towards the Treasury's challenging gross funding target of around 450 billion euros has for next year.

Prime Minister Mario Monti said he would present the new measures to its European Union partners at the end of January and made clear he expected more efforts at the EU level towards solving the bloc's debt crisis.