Spanish 10-year bonds slid, pushing yields to more than 7 percent, after yesterday's Greek election failed to assure investors that politicians will be able to tame Europe's debt crisis.

Italian securities also fell and German bunds erased a decline. Spain's yield climbed to a euro-era record as a report today showed the nation's bad loans increased in April. The bonds tumbled last week after Europe's fourth largest economy requested as much as 100 billion euros ($126 billion) of aid on June 9 to support its banks. Greek bonds rose after pro-bailout parties won enough seats to control parliament.

"The spotlight is now back on Spain," said Christian Reicherter, a Frankfurt-based analyst at DZ Bank AG. "The market is worried about the bad loans at the Spanish lenders, which is pressuring the bonds. This goes to show that the European debt crisis isn't solved and we expect bunds to remain well supported."

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