MILAN: Italy's 10-year borrowing costs dropped below 5.5 percent at auction on Thursday as support from domestic banks helped Italy sell a healthy 8.0 billion euros of medium- and long-term bonds, near the top of its target range.

Italy paid 5.24 percent to sell 10-year paper, the lowest level since last August. The sale was covered 1.65 times, up from 1.4 times a month ago, when the rate had been 5.5 percent.

At 4.18 percent - broadly unchanged from a month ago - five-year borrowing costs stabilised at their lowest level since last May. The bid-to-cover ratio rose to 1.65 from 1.41.

Italy also sold a new floating-rate CCTeu bond due in 2017 for 2.26 billion euros. The Treasury offers these bonds that are tied to the Euribor rate every three-months.

The Treasury had planned to sell up to 8.25 billion euros of bonds in total on Thursday.

After a recent wave of profit-taking, investors were keen to assess the strength of demand for Italian debt at auction.

Rome's third debt-sale this week comes after a solid bill auction on Wednesday and a smaller bond sale on Tuesday - which triggered a negative reaction on the secondary market due to an excess of supply in the inflation-linked segment.