Italy scraped through a key bond auction test yesterday, but Prime Minister Mario Monti called for a European-wide response to the debt crisis that has pushed the eurozone to the brink.

The Treasury raised €7 billion, below the maximum sought of €8.5 billion but with long-term rates holding below the danger threshold of seven per cent which has set off alarm bells around the world.

The rate on bonds due in 2021 was at 6.7 per cent – higher than the level of 5.77 per cent for the last similar operation on October 13. The rate on bonds due in 2022, however, was 6.98 per cent compared to 7.56 per cent in November.

Short-term rates had fallen sharply in another auction on Wednesday. This week’s auctions “went rather well and this is encouraging but we certainly do not think that the phase of financial turbulence is finished,” Mr Monti told reporters at an end-of-year press conference.

Mr Monti also stressed that problems for Italy on the markets were linked to wider difficulties on the European level which required a “united, joint and convincing response” that could also boost growth.

Italy’s ability to borrow on the market was being closely watched as a test of confidence in the eurozone.

The euro hit the lowest dollar levels in more than a year and 10-year lows against the yen following the auction in a renewed sign of investor concern.

“The bond auction went okay, given what is going on in the eurozone, but almost 7.0 per cent for 10-year paper is very high,” ETX Capital trader Manoj Ladwa told AFP.

Rene Defossez, a bond strategist at French investment bank Natixis: “There’s no reason to be over the moon. We’re basically at 7.0 per cent.

“We have to remember that next year there is a big, big programme and the conditions for raising it are not necessarily very good,” he said.

Italy will have to raise €450 billion on the debt markets in 2012 – with around €53 billion to be raised next month – and analysts say it will struggle if the high rates seen recently persist.