Italy's auction of up to 5.25 billion euros in bonds on Friday looks altogether more testing after Moody's cut its rating on the euro zone's third-largest economy to just two notches above junk status. The agency downgraded Italy's sovereign rating by two notches to 'Baa2', citing rising risks of higher funding costs and a loss of market access. It warned it may cut it further. The unexpected move weighed negatively on Italian bonds in early trade but a new three-year bond on sale on Friday still traded at levels which pointed to a fall in the cost of borrowing from a month ago. "The (Italian government bond) ... (full story)