BERLIN – The debt crisis struck at the heart of Europe on Wednesday, as Germany fared surprisingly poorly at a bond auction and its leader feuded with top European Union officials over their push for jointly guaranteed debt.

Germany is Europe’s biggest, most solid economy and the linchpin for all bailouts of troubled economies in the 17-nation eurozone. Investors’ reticence to buy safe German debt at low interest rates speaks volumes about the uncertainty weighing on the continent, where refinancing conditions for governments and banks are rapidly deteriorating.

The flopped German auction of 10-year bonds caused stocks to drop around the world, including in the United States, and sent the euro sliding to a seven-week low against the dollar. By evening, the euro was trading 1.2 percent lower on the day at $1.3357.

“If Germany can’t sell bonds, what is the rest of Europe going to do?” asked Benjamin Reitzes, an analyst at BMO Capital Markets.

It was a surprising new twist to a crisis that has already seen smaller eurozone nations Greece, Portugal and Ireland bailed out and is now threatening much-bigger economies like Italy and Spain.

Adding to Europe’s woes, France, the eurozone’s second-largest economy, again received a warning that it might lose its top-notch Triple-A credit rating.

The German Financial Agency said the $8.1 billion auction met with only 60 percent demand, one of the worst results since the euro’s introduction a decade ago.

German officials cited a record-low yield and the “extraordinarily nervous market environment” for the auction’s failure, but investors took it as a warning sign.


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