Exchange traded funds that follow European stock indexes have steadied after a large decline as concerns over the debt crisis have calmed somewhat.

Still, interest rates on Greek 10-year bonds surged to new records on Thursday as yields climbed above 18%, the Associated Press reported.

The European Central Bank has been trying to support markets by buying government bonds of troubled countries on the periphery. Most of the money can be traced back to Italy and Spain, where the possibility of higher interest rates and default still looms. [European Stock ETFs Pressured by Banks]

The iShares MSCI Italy Index (NYSEArca: EWI) and the iShares MSCI Spain Index (NYSEArca: EWP) have suffered big losses over the past three months. Bailouts for Italy and Spain would be so enormous that helping out Portugal, Greece or Ireland would be out of the question, reports Howard Schneider for The Washington Post. [Italy, Spain ETFs Back in the Debt Vise]

“At this time –we’re in a dramatic crisis–Eurobonds are precisely the wrong answer,” German Chancellor Angela Merkel said in an interview, according to Bloomberg News.

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