A deepening political crisis in Portugal and Greece’s inability to push ahead with public sector job cuts sent bond yields rocketing, reigniting concerns about the breakdown of eurozone bailout programmes after months of relative calm in the bloc.

The turbulence reverberated in the eurozone periphery. While Italy’s bond market was relatively calm, Spain’s 10-year bond yield rose 14 basis points to 4.74 per cent, and Greece’s comparable bond yield jumped 34bp to 11.11 per cent.

Investors were also unnerved by another brewing showdown between Greece and its creditors after the country’s international lenders warned yesterday that they would withhold an €8.1bn loan payment unless the government galvanised efforts to gut a bloated public sector workforce by Friday.