"Markets have yet to be convinced in full either that the (Greek) exit door will be open or that the extent of any contagion from this could be irreparably damaging to the system," said Neil Williams, chief economist at Hermes Investment Management.
Yields on Italian, Spanish and Portuguese government bonds rose between 9 and 17 basis points. German 10-year yields fell 6.4 bps to 0.73 percent.
The yield gap between Italian and German 10-year bonds was on track for its widest close since the end of October.
Rush From Risk
Greek bond markets have been closed since the regulator requested their suspension last week but dealers' quotes indicated two-year yields at 51.34 percent, the highest since the bonds were issued in July 2014.
U.S. 10-year Treasury yields dropped 9 bps to 2.30 percent as investors sought the safety of low-risk debt.
The euro weakened throughout the European morning and was last down 0.8 to $1.1023 and 0.8 percent against the safe-haven Japanese yen. It has fallen more than that against the dollar on 22 days this year.
It fell as low as $1.0967 in Asia before rebounding, garnering some support from the resignation of Greece's outspoken finance minister, Yanis Varoufakis.
The euro's fall helped push the dollar up 0.3 percent against a basket of currencies
In Asia, the rush from risk took MSCI's broadest index of Asia-Pacific shares outside Japan down 2.8 percent in the steepest daily drop in two years.
Chinese stocks rose, however, after an unprecedented series of support measures from Beijing to halt a slide of around 30 percent since mid-June.
The CSI 300 index of the largest listed companies in Shanghai and Shenzhen rose 2.9 percent.