Irish and Portuguese bonds fell amid speculation Greek prime minister George Papandreou's confidence-vote victory doesn't signal an end to the euro region's sovereign debt crisis.

Ireland's 10-year yield rose above of an all-time high, while Portugal's two- and 10-year yields also reached records.

Attention now turns to whether Mr Papandreou can push through parliamentary approval next week of a €78 billion package of budget cuts to stave off the threat of default. German bunds rose as investors sought the euro area's safest assets.

"The market is still wary, despite the Greek confidence vote," said Eric Wand, a fixed-income strategist at Lloyds Bank Corporate Markets in London. "The austerity measures may have a much rougher ride getting through parliament. The market is a bit concerned that the situation hasn't greatly changed, and the periphery is still vulnerable."

Irish 10-year yields jumped 30 basis points to 11.718 per  cent. The yield reached its previous record 11.70 per cent on June 17th. The two-year note yield reached a euro-era high of 13.25 per cent.

Portuguese 10-year yields rose 21 basis points to an all- time high of 11.34 per cent. Two-year note yields added 38 basis points to 13.60 per cent, also a record.

The International Monetary Fund, contributor of a third of the bailout money for Greece and the two other euro-area countries that have received bailouts, Ireland and Portugal, has warned EU leaders that a failure to take decisive action on the debt crisis risks triggering "large global spillovers".

European governments are pressing reluctant banks and insurers to share the pain of a second Greek bailout package, in an attempt to avoid market meltdown while reducing the cost to taxpayers.

Talks between governments and creditors began across the euro zone today, three people familiar with the matter told Reuters. The European Union region agreed last week that any private sector support for the bailout had to be voluntary.

"The (German) finance ministry has invited banks and insurers for talks on a working group level in Frankfurt," the source said, adding that all relevant banks and insurers in Germany that could contribute would take part.

Separately, the French insurers' association FFSA said its head Bernard Spitz had been summoned to the finance ministry today to discuss the Greek debt situation.

Greek two-year notes dropped, erasing an earlier advance made after Mr Papandreou's victory paved the way for the country to implement austerity measures needed to receive further aid. Mr Papandreou reshuffled his cabinet and sought the approval of the chamber after fending off a revolt within his socialist Pasok party last week.

A total of 155 Greek lawmakers supported the motion in the 300-seat parliament in Athens early this morning, with 143 voting against, the speaker, Filippos Petsalnikos, said.

European finance ministers said this week that they would withhold approval of a €12 billion payment to the country promised for July until passage of the plans to cut the deficit, sell state assets and impose a "crisis levy" on wages.

Greek two-year note yields, which surpassed 30 per cent for the first time last week, rose 12 basis points to 27.76 per cent as of 12:43 p.m. in London. They reached as low as 27.23 per cent earlier.

The 4.6 per cent security due May 2013 fell 0.02, or 20 euro cents per 1,000-euro face amount, to 68.945. The 10-year bond yield added three basis points to 17 percent. It rose to a euro-era record 18.35 per cent on June 17th.

"Attention will turn to next week's vote on the austerity package," said Huw Worthington, a fixed-income strategist at Barclays Capital in London. "It looks like that will be passed. Then, they'll get the money in July and we may see a bit of a relief rally."

Greek and Portuguese securities have lost 19 per cent in 2011, while Irish debt has dropped 10 per cent, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. German government bonds have returned 0.2 per cent, while Treasuries gained 3.2 per cent, the indexes show.

Bloomberg, Reuters