Poor performance of Italy's retail-bond linked to high volatility in market

Italy's efforts to lure ordinary savers to buy up government debt are floundering, with a senior Treasury official blaming wild price swings in the state bond market for discouraging many of them from investing.

A disappointing take-up for the latest "BTP Italia" retail bond so far this week has called into question Rome's ability to boost domestic support for its debt as foreign demand falls and the European Central Bank ends its bond-buying programme.

Retail investors took up 723 million euros ($824 million) on Monday and Tuesday against orders worth 3.7 billion euros over two days for the previous issue.

It is one of the weakest responses since Italy first launched BTP Italia bonds in 2012 to harness the country's enormous pool of savings to help fund the world's third-largest public debt, which stands at 2.3 trillion euros.

"Higher volatility weighed on the BTP Italia offer as it weighed on other government bonds and the sale is below expectations," said Davide Iacovoni, who is in charge of debt management at the Treasury.

"Market volatility has encouraged caution especially among wealthier investors who rely on private bankers and asset managers," he told Reuters in a phone interview.