ECB fails to quell fears of contagion

Following the Cyprus bailout deal market commentators are concerned about other countries as attention turns to Luxembourg and Italy.

Luxembourg has a banking sector 20 times its GDP and the government has said that:

It [Luxembourg] "is concerned about recent statements and declarations" on the alleged risks of outsized financial sectors.

(AP)

Many are pointing out that Italy's debt levels could be unsustainable. Citi's sovereign debt crisis update:

IMF’s Financial Stability report on Italy says the system has shown “remarkable resilience”, but warns key risks for Italian banks are "continuing weakness in the real economy and the link between the financial sector and the sovereign".

Italian gossip website Dogospia reports that a 15 to 20 per cent deposit tax in Italy is being considered.

Italian and Spanish bond yields increased in today's sales:

Italian 10 year 4.73 +16
Italian five year 3.53 +20
Italian two year 196 +16

Spanish 10 year 5.05½ +12
Spanish five year 3.79 +15
Spanish two year 2.43 +9

Newspaper Die Welt reports that one-third of Germans now want to see the Deutsche Mark returned.