Italy today raised €12 billion in a treasury bond auction that drew strong demand but at interest rates sharply higher than at a previous operation.

Italy, with a public debt approaching 120% of gross domestic product, has lately prompted investor unease amid a wider euro zone finance crisis affecting Spain, Portugal, Ireland and Greece.

The Bank of Italy said the treasury had placed six-month bonds worth €8.5 billion and two-year bonds worth €3.5 billion. The offer was heavily oversubscribed.

But the yield, or interest rate demanded by investors, rose sharply compared with a similar operation November 25. The rate on the six-month bond went to 1.698% from 1.483% while that on the two-year bond rose to 2.937% from 2.307%.