Europe's debt: Pressure's on

NEW YORK (CNNMoney) -- Investors kept the pressure on European debt on Thursday as interest rates on government bonds remained at elevated levels, a day after a weak Germany bond auction rattled markets in the United States.

German 10-year bond yields rose to 2.26% in early trading before backing off slightly to end the session at 2.19%. Meanwhile Italian 10-year bond yields again rose above the bailout benchmark to a high of 7.13%, before closing at 7.11% on Thursday.

On Wednesday, Germany suffered from a lack of strong demand for its safe bunds, with the government selling only €3.6 billion. The results suggest "that Germany is not immune to increasing risk aversion in the [eurozone] sovereign debt market," wrote Marc Chandler of Brown Brothers Harriman.

Germany is the largest economy in Europe, followed by France, and is considered to be a pillar of the eurozone economy. Therefore, its bonds are consider the gold standard of sovereign debt, keeping its yields relatively low.

French 10-year bond yields rose slightly Thursday, closing at 3.72%.

As Italian bond yields flirt with the 7% danger zone -- it's another red flag to investors about the debt-ridden eurozone.

While 7% does not automatically trigger a bailout, it is the level that Ireland, Portugal and Greece exceeded before they got bailed out by their European neighbors.

Italian bond yields exceeded 7% earlier in November, then dropped back below the benchmark. The Italian economy is the third largest in the eurozone; a default on Italian debt would likely exact a heavy toll on Europe.

Meanwhile on Thursday, credit rating agency Fitch downgraded Portugal to junk status, based on the country's high debts and poor economic prospects.

Europe's Debt Crisis

Searching for solutions: The critical situation in Europe has left officials groping for answers.

European leaders met Thursday in France to discuss options for handling the eurozone debt crisis.

"The situation is not easy, trust has been lost, and that is why it's important that we demonstrate that we trust each other," said German Chancellor Angela Merkel at the eurozone press conference.

"We have to make it clear that we want to take steps in the right direction of a fiscal union, to express our belief that politics have to be coordinated when you have a common stable currency."

French president Nicolas Sarkozy added that, "We are determined as the three big economies of the eurozone to do all we can to support and guarantee the sustainability of the euro."

On Wednesday, the European Commission unveiled a plan detailing options for so-called eurobonds. Some see eurobonds as a way out of the debt crisis, because they would effectively pool the debt of the 17 eurozone countries.

But the idea is controversial and has drawn opposition from stronger eurozone countries, particularly Germany.

Europe's healthier nations are concerned about becoming liable for the debt service payments of entire regions, including Greece and Italy, without having a say in their future fiscal actions and policies.