Risks remain elevated of further stress in eurozone bond markets despite an easing over the summer months, the ECB's Financial Stability Review said on Wednesday, pointing to concerns including the risk that EU member states fail to reach agreement on fiscal rule reform.

The euro area budget deficit "is projected to decline over the coming years" as the fiscal stance tightens but ongoing negotiations on fiscal rules are inducing significant uncertainty, the report said, adding that tensions could appear especially if market participants perceive budget planning in some countries to be detrimental to longer-term debt sustainability. (See MNI: Hopes Rise In Dash For EU Fiscal Rule Deal By Year End)