Greek bond yields hit their highest this year on Monday and Portuguese yields also rose, with the two countries seen as the most vulnerable in the euro zone to a spillover from emerging market tensions.
Tighter credit conditions in China and expectations of a further scaling back of the Federal Reserve's monetary stimulus have fuelled a large scale sell-off in emerging markets, with currencies in Turkey, Argentina and Russia hitting record lows.
The sell-off hit Greek and Portuguese bonds more than their euro zone peers. In stock markets, by contrast, Spanish shares were among the worst hit due to their exposure to Latin America.
Limiting the impact on Spanish bonds, two-thirds of the debt is in the hands of domestic investors, who are less likely to sell when global investors withdraw funds from high-yielding markets.
Roughly half of Portuguese bonds are owned domestically, making the country more vulnerable than Spain during major shifts in global sentiment. Data on Greece was not immediately available, but traders say many of the bonds are in the hands of foreign hedge funds.
Both Portugal and Greece are thought to have a significant U.S. investor base. The two bailed-out countries have also lured many investors with mandates to invest in emerging markets as their yields are close to those in similarly rated emerging economies.
"Italy and Spain have strong internal demand, while Portugal and Greece rely on investor demand from abroad and a lot of it has come from emerging market fund managers recently ... as they found the yield attractive,» ING rate strategist Alessandro Giansanti said.
Portuguese 10-year yields rose 2 basis points on Monday to 5.32 percent, having risen more than 30 bps on Friday when the emerging market sell-off was more intense.
Equivalent Greek yields rose as high as 8.67 percent, their highest this year. This was 4 bps up on the day and about 30 bps higher than on Thursday.
Italian and Spanish yields also rose 2-3 bps higher on the day, but less than 10 bps higher than on Thursday.
"Portugal and Greece have certainly been hit harder than Italy and Spain. That reflects the low liquidity of those markets, not any fundamental concerns,» said Nick Stamenkovic, bond strategist at RIA Capital Markets in Edinburgh.
Yields on German 10-year Bunds, the euro zone benchmark and seen as one of the safest assets in the world, were flat at 1.66 percent, having fallen 5 bps on Friday.