Hauke Siemssen, an analyst at Commerzbank, added: “Latest bond market dynamics are increasingly concerning and somewhat reminiscent of a sovereign debt crisis.”
Jim Reid, an analyst at Deutsche Bank, said: “The big question is whether this is the start of a new euro sovereign crisis or whether markets have already overshot.”
Adding to the uncertainty in the eurozone, Pedro Sanchez, the Spanish prime minister, has called an early election for Nov 29.
He called the vote on Monday after Spain’s parliament rejected a package of measures to tackle the country’s housing crisis on Friday.
The euro dropped as much as 0.5pc against the pound to be worth just under 85p, its weakest level since July.
