Milan's FTSE-Mib Down 5% Near End Of Tuesday Trading Session

Milan's FTSE-Mib clue-chip index lost more than 5% in late-session trading Tuesday as investors sold financial stocks and debt-heavy companies amid renewed fear of an Italian debt squeeze.

At 1517 GMT, Intesa Sanpaolo SpA (ISP.MI), Italy's largest bank, led decliners, shedding 8.1%, while its largest rival UniCredit SpA (UCG.MI) lost 7.8%.

Traders cited the widening spread, or interest-rate gap, between Italian and German sovereign bonds as the reason for the selloff. The spread rose above 400 basis points, or four percentage points.

Other listed banks such as Banco Popolare (BP.MI) and UBI Banca SCpA (UBI.MI) also posted sharp drops.

Fiat SpA (F.MI) declined 6.2%, followed by other debt-heavy industrial stocks including Fiat Industrial SpA (FI.MI) and Mediaset SpA (MS.MI).

The FTSE-MIB index is down 4.85 at 14,4887 having inched up from a lower level shortly before.

-By Christopher Emsden, Dow Jones Newswires; +39 06 6976 6921; chris.emsdenloney@dowjones.com