Italy has paid sharply lower interest rates to raise (EURO)9 billion ($11.25 billion) in six-month treasury bonds, confirmation that investor confidence in the country has improved.

Italy's central bank said the interest rate on the debt was 1.585 percent, down from 2.45 percent in the last such auction in July. Demand in Wednesday's auction was 1.69 times the offer.

On Tuesday, longer term bonds, including 10-year debt, also sold briskly at lower interest rates.

Borrowing rates for Italy and Spain have dropped sharply in recent weeks on expectations that the European Central Bank will approve a plan to buy those countries' government bonds.

Premier Mario Monti, who is pushing through reforms to heal Italy's finances, will meet with German Chancellor Angela Merkel in Berlin later Wednesday.