Prime Minister Mario Monti's market honeymoon is ending as Italian bond yields near 7 percent signal mounting concern his government may struggle to sell 440 billion euros ($574 billion) of debt next year.

Monti took just five weeks in office to push through a 30 billion-euro emergency budget package aimed at taming surging borrowing costs. Investors reacted to the plan's final approval by the Senate by driving up the yield on Italy's 10-year benchmark bond to 6.91 percent Friday, near the 7 percent level that prompted Greece, Ireland and Portugal to seek bailouts.

"The Monti effect has now also been priced in and I think there is a lot of room for disappointment next year," said Lex Van Dam, who manages $500 million in assets at Hampstead Capital LLC in London.

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