Italy's borrowing costs soared on Tuesday, with 10-year yields approaching their highest levels since January amid concerns that the eurozone's third largest economy may require European Union assistance due to the high interest levels on its debt.

By mid-morning the yield on the benchmark 10-year Italian bond had reached 6.16 percent, the highest since January 31.

Meanwhile the spread, or premium demanded by investors for Italian bonds over Germany's benchmark securities, soared to 483 points from an opening level of 468.8.

The spike in Italy's borrowing costs came amid continuing market doubts over EU efforts to provide financial assistance to Spain which will initially be limited to the country's financial sector and does not include extra austerity requirements.

While Italy's banks are in a stronger position than their Spanish counterparts, the country continues to be mired in recession with the economy predicted to shrink by 1.7 per cent this year according to Organization for Economic Co-operation and Development (OECD) estimates.

On Monday, Italian Industry Minister Corrado Passera rejected the notion that his country may need external help, describing Italy as "among countries better placed to deal with the financial turmoil Europe finds itself in".