MILAN: The high volatility of bond yields in current difficult markets, rather than outright yield levels, poses the main hurdle for Italy at auctions, a senior treasury official said on Thursday.

Davide Iacovoni told a financial conference that high volatility made it very difficult for investors to assess the likely performance of a bond to be bought at auction and discouraged more risk-averse players from participating in bond sales.

"The main problem is not so much where yields stand but their volatility," Iacovoni said.

 "Investors looking to buy at auction or at a syndicated placement try to assess the perfomance but such levels of volatility make this analysis too complex, discouraging the most risk-averse," he said.

Iacovoni cited as an example Italy's sale of three-year bonds this month.

Jitters about Greece pushed the yield on the bond to be sold up around 40 basis points on the morning of the auction compared with the previous close.

Iacovoni said preparatory work by the treasury and the role played by primary dealers had ensured the success of the auction despite the yield spike.