By Francesca Landini
MILAN, May 13 (Reuters) - Italy's three-year debt costs fell to their lowest since January at auction on Monday as investors backstopped by European Central Bank guarantees brushed off concerns about the country's political and economic troubles.
Rome raised 8 billion euros from the triple bond sale, hitting the top of its target range, with the yield on the three-year bond tumbling to 1.92 percent from 2.29 percent at a similar sale one month ago.
It also sold 1.5 billion euros of a fixed-rate bond maturing March 2026, paying 4.07 percent. Overall demand was slightly down at 1.34 times the offer,
'The demand, however, is weakening as falling yields are reducing appetite for Italy's debt,' said Vincenzo Longo, market strategist at IG.
Italy has benefited from an ECB pledge to do all in its powers to protect the euro zone, creating a firewall against a selloff of debt issued by the region's more troubled nations.
That has meant investors have paid little heed to Italy's struggling economy and political tensions. Prime Minister Enrico Letta warned on Sunday that the future of the fledgling government was at risk following a row over attacks on magistrates by Silvio Berlusconi.
(Additional reporting by Gabriella Bruschi in Milan; Editing by John Stonestreet) Keywords: ITALY DEBT/BONDS
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