Italy borrowing costs hit 5-year high in bond auction

MILAN, Oct 11 (Reuters) - Italy paid the most in five years to sell three-year debt on Thursday, in its first bond auction since Rome's new populist government tripled the budget deficit target for next year.

The heavily indebted nation's borrowing costs have jumped due to investor fears over Rome's plan to boost deficit spending. The government wants to fund costly electoral promises such as a lower retirement age and a basic income for the poor.

Italy sold a new three-year bond at a yield of 2.51 percent, the highest since September 2013.

Overall, including other issues maturing over seven, 15 and 30 years, Italy's treasury raised 6.5 billion euros ($7.5 billion), the maximum it had set itself ahead of the auction.

For details of the issue, click on ($1 0.8660 euros) (Reporting by Valentina Za Editing by Mark Bendeich)