Exchange traded funds following the euro declined Monday as the European debt crisis heated up again after eight lenders failed stress tests. European bank stocks were under pressure before a meeting of government officials Thursday to discuss solutions to the region’s debt turmoil.

Bond yields in Italy and Spain rose Monday in the wake of the stress tests while CurrencyShares Euro Trust (NYSEArca: FXE) slipped 0.5% as the euro weakened against the dollar and iShares MSCI Italy (NYSEArca: EWI) fell more than 2%.

Lingering uncertainty over the U.S. debt ceiling also had markets on edge — iPath S&P 500 VIX Short-Term Futures ETN (NYSEArca: VXX) rose nearly 2%.

Volatility-linked ETFs climbed last week while global stocks pulled back on debt worries. [Equities ETFs in ‘Sideways Stagger’]

U.S. equities started the week in the red while precious metals ETFs gained ground Monday as gold climbed above $1,600 an ounce for the first time. [Metals ETFs Rise]