The cost of insuring the subordinated debt of European financial firms rose 12% on Monday to its highest since April 2013, Markit's iTraxx index showed.

A similar index for financials' senior debt  hit its highest since October 2013. Both indices are up around 40% in the past week.

Shares in U.S. banks Citigroup and JP Morgan trading in Frankfurt were down 3.5% and 3.7% respectively, albeit in very low volume.

Worries over the banks pushed up borrowing costs in Portugal, Spain and Italy - three countries that were at the heart of the euro zone sovereign debt crisis.

Yields on Portugal's 10-year debt rose 21 basis points to 3.14%, their highest since July 2015.

At the same time, German 10-year yields, the euro zone benchmark, fell more than 6 bps to 0.25% and two-year yields hit a record low of -0.506%.

Ten-year U.S. Treasury yields fell 5.5 bps to 1.79%.

Dollar down 

This pushed the dollar to its lowest against the safe-haven Japanese yen for more than two weeks at 116.11 yen, down 0.6% on the day.