Italy led European exchange traded funds lower Wednesday as the country’s bond yields spiked above the key level of 7% amid talk the European Central Bank was intervening to stop the bleeding.

The iShares MSCI Italy (NYSEArca: EWI) fell 6.5% in premarket trading. Italian Prime Minister Silvio Berlusconi has offered to resign.

“This is a negative spiral in terms of Italian debt,” said Yves Maillot, head of investments at Robeco Gestions , in a Bloomberg report. “We already were in a perilous situation. The level of debt in Italy is a very, very big problem. In spite of the good news of changes in Italian leadership, the problem is deeper.”

The Italy ETF is down 15% year to date.

In currency markets, CurrencyShares Euro Trust (NYSEArca: FXE) slipped 1.6% before Wednesday’s opening bell.

iShares MSCI Italy

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