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Italy yields above 5 pct are sustainable-ECB's Visco

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FRANKFURT, Oct 12 (Reuters) - Sovereign bond yields above 5percent are sustainable for Italy though they are very costlyand crimp growth, Bank of Italy chief Ignazio Visco said incomments released on Friday.

The yield on Italy's benchmark 10-year bonds is around 5percent.

"Even more than 5 (percent) is sustainable for the country,"Visco, a member of the European Central Bank's policymakingGoverning Council, told CNN, when asked about sovereign bondyields.

"The problem is not whether it is sustainable but whether itis costly. So it is extremely costly, and the cost you see inthe end in a lower rate of growth and there may be a spiral inthat. But 5 percent is among the lowest rates Italy has had inmany years."

"Relative to the growth rate it is high, but it issustainable," he added.

(Reporting by Sakari Suoninen, writing by Paul Carrel)

((paul.carrel@thomsonreuters.com)(+49 69 7565 1313))

Keywords: ITALY DEBT/ECB