Although the deal on the U.S. debt ceiling and vote in Congress dominated Monday’s headlines, the other big story in financial markets was the continued unraveling in Europe exchange traded funds, with ETFs tracking Italy, Germany and Ireland coming under pressure.

Investors are worried the second Greek bailout won’t be enough to stem the region’s credit crisis. In currency ETFs, CurrencyShares Euro Trust (NYSEArca: FXE) fell nearly 1% as the euro weakened against the dollar.

Stock ETFs opened higher Monday on relief over the agreement on the debt limit, but the rally quickly faded after a bleak ISM manufacturing report. [Poor Manufacturing Report Knocks Stock ETFs]

Worries over the health of Italy and Spain are confusing attempts to provide Greece with its next installment of rescue aid, The Wall Street Journal reported.

The iShares MSCI Italy (NYSEArca: EWI) fell nearly 4% in U.S. afternoon trading Monday. The ETF is down more than 20% over the past three months, one of the biggest percentage decliners over that period. Trading in options based on the Italy ETF jumped more than 500% above average on Monday, according to optionMONSTER.

Elsewhere in European single-country ETFs, iShares MSCI Ireland (NYSEArca: EIRL) fell 3.4% and iShares MSCI Germany (NYSEArca: EWG) was off 2.8%.

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