IMF's warning as it calls for a bigger bailout of euro PIIGS

Europe's Piigs came under renewed pressure today amid IMF warnings that the crisis sending shock waves through the eurozone threatens to derail the recovery.

The IMF has called on European finance ministers meeting today to ratchet up the size of its €750 billion (£637 billion) bailout fund as well as stepping up bond purchases by the European Central Bank to soothe market nerves.

After two days of relative calm, helped by ECB interventions, weaker foreign nations were hit by a sell-off today, pushing up the borrowing costs of Portugal, Italy, Greece and Spain. Yields on 10-year Greek debt blew out to 11.34%, while Spain's edged higher to 5.08%. The IMF's report warns the recovery could "easily be derailed" by the turmoil and said the pressure on peripheral European nations was a "severe downside risk".

It says there is a "strong case" for increasing emergency support measures but this is likely to be resisted by Germany, which is worried over sharing the burden of any further bailouts.

The end of the respite in markets will raise fears that European leaders have merely postponed another crisis after Ireland's €85 billion rescue a week ago. Ireland will be back in focus tomorrow as its beleaguered government attempts to push through further austerity measures.