Italy comes to markets........>

ITALY AUCTION PREVIEW: Italy comes to markets Thursday for the second time this

week, re-opening Oct-23 2.45% BTP for E3.00-3.75bln, Dec-28 2.80% BTP for

E1.75-2.25bln, and CCTeu Oct-24 and CCTeu Sep-25 for a total of E1.25-1.75bln.

- BACKGROUND: The auction comes as BTP yields are retracing from multi-month

highs, following reports Wednesday that the government may request the ECB to

continue its asset purchase programme (later denied by Rome).

- RV/HISTORY: Despite some relief in the past 48 hours, perceived risk of Italy

remains high, with the 5-year credit default swap at 253bps, near the May high

of 271bps. The belly of the Italian nominal curve has underperformed over the

past week, with 5-Year BTPs trading in a 35bps range topping out at 2.485%, last

at 2.404%, while 10-Years have traded in a 28bps range topping out 3.206%, last

at 3.120%. Still, the CTZ auction on Tuesday went smoothly (selling E1.75bln of

Mar-20 at top end of target range, on 1.9x cover vs 1.6x previous), and the

E6.7bln in coupon payments by Italy this week are seen supporting the auction.

- TIMING: Auction results are due after the auction closes at 1100GMT.