Following a speculation in the market about the losses at French banks and worries about Hungary added to the persisting doubts over economic recovery in Europe, the cost of insuring debt issued by European sovereign borrowers rose sharply.

Though Spain has witnessed the pressure lately, but the investors have vented out their frustration on stronger euro members like Italy and France. It is believed that France is the second largest economy in Europe after Germany.

Reports claim that the budget deficits in France and Italy are relatively smaller as compared with Greece, Ireland and possibly Hungary.

As European debt jitters persists, the concerns in the derivatives market is growing irrespective of the situation that is prevalent in the less dependent euro economies.

As per the reports, it now costs $290,000 a year to insure a $10 million of Italian Government bonds against the default for five years. The figure has risen from $237,000 on Thursday, as per the data provider Markit.

The extra interest that Italy is bound to pay the investors in order to buy its bonds instead of Germany's, has also witnessed a rise.

In comparison, the cost of insuring Irish debt against default has become slightly higher at $340,000, despite that fact that Ireland has a budget deficit, which is much larger than Italy's.

In France, the debt-default insurance cost has more than tripled since January; however the similar costs for Britain have largely remained between $80,000 and $90,000 over the same period.

According to Markit, following the remarks of Lajos Kosa, in Hungary, the cost of insurance against default climbed more than $100,000 to $430,000.

Commenting on the situation, Cagdas Aksu, a European fixed-income analyst at Barclays Capital in London said, "There are things that don't make a lot of sense”.