Greece contagion sweeps eurozone bond markets, hits shares

Global financial markets suffered their first bout of significant contagion from the Greek crisis this year on Monday after 11th hour talks between the near bankrupt country and its creditors collapsed.

After weeks of minor ebbs and flows on the stop-start negotiations, bond markets across the euro zone signaled alarm that a deal may not be reached by mid-year, when Athens must repay 1.6 billion euros ($1.8 billion) to the International Monetary Fund.

The premium investors demand to hold Spanish, Italian and Portuguese government bonds over low-risk German Bunds hit 2015 highs, with the 10-year yield gap between Spanish and German debt at its widest since August.

Shares in Europe and Asia fell, led lower by banks.

The euro weakened against the dollar, pressured also by investor anxiety ahead of a U.S. Federal Reserve interest rate-setting meeting later this week.

U.S. stock index futures ESc1 were down 0.4 percent, suggesting Wall Street would extend Friday's declines, which were blamed on worries over Greece and the Fed meeting.

Talks on Sunday between Greece and its creditors, described as a "last attempt" to bridge their differences, broke up after less than an hour.

European Union officials said Athens had offered no new concessions to secure the funding it needs. Athens said it would not give in to demands for more pension and wage cuts.

Greece has already been bailed out twice and many banks have cut their exposure to the country while eurozone authorities have put in place mechanisms to limit contagion. However, the prospect of default and the possibility of Athens leaving the euro weighed heavily on sentiment on Monday.

"It's clear that each day that passes we come...