Yields on Italian 10-year bonds traded as high as 7.48%, rising above the key 7% level and marking its highest since the euro was launched in 1999. Yields initially spiked after London clearing house LCH Clearnet raised margins on the amount of collateral traders had to put up to hold Italian bonds

The 7% level is significant because that was the mark Ireland and Portugal crossed shortly before receiving bailouts from the European Union and International Monetary Fund. Ireland's actually rose above 8%, while Portugal's breached 9%. And yields for Greek bonds touched the 10% mark.

The run-up on Italian bond yields comes despite a rush of buying by the European Central Bank, which has been struggling to keep those yields below 6%.