Italy sold $6.5 billion worth of government bonds Wednesday, paying the highest rate it at least for years, as investors reacted cautiously to the indebted nation's attempt to stablize markets amid its ongoing political chaos.

That said, investors appeared to be attracted to the auction's higher return, which saw 10-year bonds sold at a yield-to-maturity of 3%, significantly higher than the 1.7% the government paid in late April. Italy's 5-year sale was made at a yield-to-maturity of 2.32%, the highest since February 2014.

Investors bid €1.48 for every €1 of debt sold, Italy's Treasury said, meaning €8.24 billion in bids were placed for the €5.57 billion bonds that were ultimately sold, indicating the strongest demand for an auction since December. 

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With the European Central Bank's €2.2 trillion quantitative easing program still buying as much as €30 billion a month, and the central bank holding around 15% of Italy's outstanding debt, investors may be hoping to arbitrage today's auction rates into a quick profit over the coming months as the bonds are financed by near-zero borrowing rates before they're sold to the ECB.

The relatively solid auction reflects a modest rebound for Italian assets Wednesday, with the benchmark FTSE MIB index rising 1.02% on the strength of banking and financial sector stocks, while yields on the country's benchmark 2-year notes fell from yesterday's high of 2.73% to around 1.56% following the 10-year sale.

The European single currency was also on the march, rising 0.1% against the U.S. dollar to trade at 1.1631 by mid-day in London.