(Adds analyst's comments)
MILAN, Oct 10 (Reuters) - Italy's one-year borrowing costsrose at an auction on Wednesday as persistent uncertainty overwhether Spain will request a bailout cut investor appetite forshort-dated peripheral debt.ï¿½ The Treasury sold 8 billion euros bills maturing on Oct. 142013 at yield of 1.94 percent, in line with the market price andcompared with 1.69 percent at an equivalent sale inmid-September.
But the interest rate remained well below the yield of justunder 4 percent paid at a mid-June auction.
"Yields have gone up in line with the market move seen inrecent days, but there is nothing to worry about," saidAlessandro Giansanti, bond analyst at ING.
Italy's borrowing costs have fallen over the past monththanks to a pledge by the European Central Bank to intervene inthe bond market to help weaker euro zone countries.
However, the market mood has become more cautious in recentdays because of uncertainty over Spain's readiness to requestthe financial aid that would trigger the ECB new bond-buyingscheme.
Investors expect that Madrid will ultimately be forced toask for help. But with no signs of that being imminent, thegovernment bonds of both Spain and Italy have retraced some ofthe gains posted in recent weeks.
On Wednesday the Treasury also issued 3 billion euros ofthree-month bills with a yield of 0.765 percent, slightly upfrom 0.7 percent at a mid-September auction.
The amount raised on both maturities was in line with thetreasury's target.
(Reporting by Francesca Landini; Editing by John Stonestreet)
Keywords: ITALY DEBT/