BERLIN -- The German government had to sweeten the yield on its latest debt offering Wednesday, showing that even those European governments with relatively healthy budgets are struggling to overcome tight bank liquidity and market skepticism about economic and fiscal risks.

Out of 17 auctions for German government bonds so far this year, seven tenders undersold after failing to attract enough bids. The latest shortfall came Wednesday, when the government could sell only €3.208 billion ($5.06 billion) of a €4 billion...