FRANKFURT — Germany’s stature as an island of stability in the European debt crisis was shaken Wednesday when it fell far short of selling all the government bonds it put up for auction.
Investors are beginning to question whether there are any havens left in Europe after German bonds, which the government uses to raise money for operations, got a surprisingly bad reception. The sale — more than one-third of the bonds found no buyers — helped push down stocks and contributed to the atmosphere of fear that prevails among the countries, including Germany, that share the euro currency.
While analysts cautioned against reading too much into a single bond auction, the weak auction was at the very least a blow to the prestige of Germany, whose economic strength has enabled it to largely dictate how the euro region will cope with the debt crisis.
And there is a growing sense in the region that unless the European Central Bank and big euro members like Germany and France agree to take major action to prop up the region’s finances, the euro-currency union itself could start to crumble. The debt crisis has toppled five governments, including Italy and Greece, by raising those countries’ borrowing costs to dangerously high levels. And now the crisis is prompting many investors to pull money out of the euro region altogether.
Until now, Germany has been able to point to its solid economy and low debt as proof that public spending cuts — austerity — are the answer to the region’s debt crisis. And it has been the loudest opponent of proposals for the European Central Bank to help shore up weaker economies by serving as lender of last resort to national governments.
But if investor faith in German slips, its moral authority could weaken, too.
“Losing that bargaining power could be massive for Germany,” said Silvio Peruzzo, an economist at the Royal Bank of Scotland. “That is one of the pillars on which Germany has based its policy approach.”
Germany on Wednesday had sought to raise as much as 6 billion euros ($8 billion) in an auction of 10-year bonds. But it was able to sell only 3.9 billion euros worth, Germany’s central bank, the Bundesbank, reported.
Another few bad auctions, Mr. Peruzzo said, “could shift the debate to, ‘The austerity is too strong, we need growth.’ ”
Already, signs that many of the euro region’s 17 countries are on the verge of economic recession has been challenging the wisdom of Germany’s austerity prescription.
On Wednesday, the European Commission, the executive agency for the 27-nation European Union, proposed measures for addressing the debt crisis in the 17-country subset of members that share the euro currency. The proposals included issuing, for the first time, bonds backed by all the countries of the euro zone — a measure that, despite German opposition, is gaining acceptance as a means of market reassurance as the crisis persists.
Chancellor Angela Merkel of Germany, during a budget debate Wednesday in Berlin, reiterated her opposition to the creation of the bonds. But she has not completely ruled out the possibility of issuing bonds based on collective euro zone obligations at some future date.
The disappointing German auction on Wednesday could be a signal that that future might be coming sooner than many had been expecting.
Charles Diebel, head of market strategy at Lloyds Banking in London, described the disappointing German auction as “a pretty significant buyers’ strike.”
“Seeing as these are supposedly the safe-haven asset of choice, people are concluding that the risk is becoming systemic,” Mr. Diebel said.
The low demand, he said, may indicate that investors increasingly expect Germany and the European Central Bank, which together would bear a large financial portion of a major euro zone bailout, “to go all in and support the euro.”
By that thinking, investors might have concluded that the relatively low yield, or interest rates, on the German bonds — Wednesday’s auctioned bonds were priced at an average yield of 1.98 percent — were not worth the potential risk that Germany’s economy could soon be strained by the demands of bailing out Italy or Spain or other big debt-saddled euro union members.
Such strains could send German bond yields much higher than Wednesday’s offering.
For comparison’s sake, yields on 10-year bonds offered by the United States Treasury, which continue to be considered a global haven, are about 1.9 percent.
Mr. Diebel said that the failure of Germany and the European Central Bank to take significant steps to address the region’s debt crisis would mean “the risk of a euro breakup increases.”
Stephen Castle reported from Brussels. David Jolly contributed reporting from Paris and Julie Creswell from New York.
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