Turning to Italy's 5-year Auction

Markets await Italy's 5-yr bond auction (see details on prev B/C ratios & yields below), Japan Q3 GDP back in positive territory after 3 straight quarterly contractions, Greeks favour Papademos but no majority as far as parties. Friday's Premium trades activated into Monti's appointment.

Italy's 5 yr auction is due at 11 am GMT. All eyes will be on the average yield and the bond/cover ratio for measuring funding cost and demand. The last 2 bond auctions produced an average yield of 5.81% and 5.32% in Oct 28 and Oct 13 respectively. But with the 5 yr yield closing at 6.46% on Friday and a new Eurozone-era record high hitting 7.83% on Thursday, the yields at prior auctions seem a thing of the past. As for the bid/cover ratios rose, the last two 5-year auctions produced 1.62% in Oct 28 and 1.34% in Oct 13 auction. But rising interest as measured by bid/cover ratios is not always indicative of improved confidence as the number of bids does not necessarily reflect strong amounts when compared to the target raised. Those same two auctions raised lower amounts, with EUR 1.4 billion in Oct 28 and EUR 4.9 bln

In Greece, sentiment seems to have dissipated after the appointment of former ECB official Papademos to the Premiership. Latest polls show 55% of Greeks have a favourable view of PM Lucas Papademos and the new coalition But respondents also said that neither of the two leading parties would succeeded in getting outright majority if snap elections were held today.

Earlier today, Japan's Q3 GDP rose 1.5% from the Q1 on q/q after 3 straight negative quarters, with consumption rebounding from the earthquake-caused slump. The 1.3% q/q rise matched expectations, with y/y growth at 6%. The soaring yen is causing several economists to expect growth to be flat at best in Q4

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