Italy raised €8.5 billion in an auction of six-month bonds, as markets continue to shrug off any concern about political uncertainty in the country ahead of next month's elections.

Borrowing rates dropped to 0.731% from 0.949% a month earlier. Demand was 1.65 times the offer, up from 1.57%.

Markets are looking for a continuation of political reforms started by Premier Mario Monti to boost growth and bring down Italy's high debt levels in the February 24-25 vote.

The centre-left Democratic Party has been leading in polls with about one-third of voters still undecided.

Also challenging is the centre-right of Silvio Berlusconi, in second place in the polls, and a group of centrist parties supporting Monti, in third.