The economic problems are not confined to a single country, with fresh European Central Bank data on Monday showing loans to eurozone households and firms grew more slowly than expected in March, as banks continued to reduce lending.
Germany reported retail sales had risen less than expected in March, indicating that private consumption in Europe's biggest economy may be flagging.
The reaction in debt markets has been fairly subdued so far with Germany's June Bund future contract up 36 ticks to 141.06 but still below a high of 141.38 reached on Friday after a two notch ratings downgrade for Spain prompted a flight to safety.
Spanish 10-year yields on Monday were at 5.88 percent, slightly short of the key 6.0 percent level, beyond which alarm bells sound about the sustainability of the cost of servicing debt.
"In our view it (the Spanish GDP data) doesn't make a huge difference...The economic performance will be a function of whether credit will be able to flow again in the economy so the banking issues remain at the core,» UBS strategist Gianluca Ziglio said.
Spain will test-market sentiment for its debt on Thursday when it sells three- and five-year bonds, the first sale since the downgrade by Standard and Poor's.
The ongoing concerns over Spain and the health of the region's economy undermined confidence in the region's share markets, dragging the FTSEurofirst 300 index of top European shares down 0.2 percent to 1,049.27.
"Coming on top of (Spain's) record unemployment data last week as well as massive demonstrations against austerity on the streets yesterday, the problems for European leaders continue to mount up,» said Michael Hewson, senior market analyst at CMC Markets.