ECB warns of growing eurozone sovereign debt risks

The European Central Bank warned Wednesday that sovereign debt risks are growing in the eurozone at a time of heightened political uncertainty and muted economic performance.

In a regular review of the single currency area's financial stability, the ECB said that markets could again be hit by debt worries similar to the crisis that rumbled through the 2010s.

Since its last assessment in May, "election outcomes at the European and national levels, notably in France, have rekindled concerns about sovereign debt sustainability," the central bank said.

Greater political uncertainty in Europe has widened bond yield spreads for some eurozone countries with higher debt levels.

Already heavy debt burdens could limit the ability of some eurozone governments to respond to "adverse shocks", the Frankfurt-based institution warned.

Overall risks to stability remained heightened, the review found, with mounting concerns about lackluster growth in the 20 countries that use the euro.

Eurozone output came in stronger than expected at 0.4 percent in July-September but that is still behind the United States and China, and experts have warned of slow growth in the months ahead.

An escalation in conflicts in the Middle East or Ukraine presented threats as well as rising global trade tensions, the ECB said.

Despite the worries over sovereign debt, ECB Vice President Luis de Guindos said the current situation was fundamentally different from the debt crisis of a decade ago.

Markets were now "fully convinced" that the euro "is not going to fall apart," he said.