The Italian/German 10-year yield spread widened 16 basis points to 382 bps and the Spanish/German equivalent rose 16 bps to 361 bps. Italian and Spanish 10-year yields rose further away from 5 percent, up around 10 bps each at 5.62 percent and 5.41 percent respectively.

"There was some expectation that the EU might announce some sort of new policy to stabilise peripheral markets and ease some of the tensions but they did absolutely nothing," said Nick Stamenkovic, strategist at RIA Capital Markets.

"The sell-off we saw in Bunds has been reversed and we see a renewed flight to quality with peripheral spreads under renewed upward pressure."

Copyright Reuters, 2011