Italian and Portuguese government bond yields are on track to end 2016 with their first yearly rise since the 2011 euro zone debt crisis.

The rise in borrowing costs in the two peripheral countries, regarded as among the weakest links in the single currency bloc comes against a backdrop of concern about weakness in the banking sector and economy as well as political instability.

Italy's ten-year government bond yield has risen about 21 basis points this year to around 1.81%, while Portuguese equivalents have soared about 123 bps to around 3.75%.

According to Tradeweb data, that marks the first annual rise in borrowing costs since 2011.

However, efforts to tackle Italy's banking crisis and the swift formation of a new government following the resignation of former premier Matteo Renzi earlier this month have helped Italian bonds recover some ground.

Ten-year Italian yields are set to end December with a fall of around 19 bps, the biggest monthly fall since March.

German Bund yields are also poised for their biggest monthly fall since June.