Greece's government debt is back in the spotlight, and investors are looking for the exit.

As the four-day rout in Greek bonds sent yields to the highest since January, the selloff started to infect nations from Ireland to Portugal and even larger countries such as France. In Spain, a debt auction fell short of the government's maximum target, and European stocks extended their longest losing streak since 2003. Only German bunds were sheltered from the slump, with demand for the safest assets pushing their yields to a record low.

“We are in a typical flight-to-quality environment with substantial losses in stock markets and wider spreads,” said Patrick Jacq, a fixed-income strategist at BNP Paribas SA in Paris. “The Spanish auction suffered from the environment, not from domestic reasons. It's the market environment which is not favorable.”