Spain's borrowing costs have risen to a record high since the launch of the euro in 1999.

The benchmark 10-year bond yield hit 6.81%, as optimism about the weekend's Spanish bank bailout continued to evaporate.

Markets continued to be uneasy about the situation in the eurozone, after ratings agency Fitch downgraded the creditworthiness of 18 more Spanish banks, following its decision on Monday to cut its ratings on the country's two biggest banks, Santander and BBVA.

The head of the IMF, Christine Lagarde, urged European leaders to take "decisive steps" to break free of the crisis; in a speech at the Center for Global Development in Washington she said economic and financial stability was critical to addressing global environmental challenges

After an initial brief rally following the 100bn-euro bailout of Spanish banks over the weekend, analysts said the markets had returned to a mood of caution.

"This is a realisation that Spain, while providing money for its banks, is going to add to its debt-to-GDP ratio," said Paul Zemsky, head of asset allocation at ING Investment Management.

"They're borrowing more money, not doing anything about growth," he added.

"Today we're not worried about Spain's banking system falling off a cliff, but other than that, nothing's changed."

Rather than soothe fears in the financial markets, the bailout of Spain's banks revealed new doubts over its impact on the country's overall debt level, where the rescue funds would come from, and whether the money would be enough.