Feb. 5 (Bloomberg) -- The cost of insuring against U.S. and U.K. debt defaults may rise in the same way as it has for so- called European peripheral nations including Greece and Portugal, Deutsche Bank AG said. âThe problems currently faced by peripheral Europe could be a dress rehearsal for what the U.S. and U.K. may face further down the road,â Jim Reid, a strategist at Deutsche Bank in London, wrote in a research note today. Credit-default swaps on the debt of Greece, Spain and Portugal rose to record highs today amid concern that European governments will struggle to fund their deficits. Contracts on Greece climbed 19.5 basis points to 446.5 before dropping to 422.5, CMA DataVision prices show. Spainâs increased 13 basis points to 183 before falling to 168, and Portugalâs rose 9.5 basis points to 239 before slipping to 223.5. The U.S. and U.K. âhave similar issues to those facing peripheral Europe but have the luxury of a flexible currency up their sleeves as a first defense if the market wants to attack them,â Reid said. âSuch a defense means that the market, for now, thinks there are easier targets.â President Barack Obama has increased U.S. marketable debt to a record $7.27 trillion, borrowing money to fund stimulus measures and bail out banks. Obama said last week heâs planning a three-year freeze on many domestic programs to save about $250 billion over 10 years as he seeks to rein in the budget deficit. Budget Deficit The U.K.âs budget deficit hit 15.7 billion pounds ($25.3 billion) two months ago, the most for any December since records began, the Office for National Statistics said Jan. 21. Moodyâs Investors Service said in December its top debt ratings on the U.S. and the U.K. may âtest the Aaa boundaries.â Yields on benchmark Treasury 10-year notes have fallen to 3.60 percent from 3.83 at the end of last year amid increased demand for the safest assets. The yield on 10-year U.K. gilt is at 3.88 percent, from 4.01 percent at the start of the year. Greeceâs 10-year government bonds yield 6.65 percent, from 5.77 percent at the start of 2010. âIt seems that the market wants to accelerate an issue that the authorities were hoping that time would heal,â Reid wrote. To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net http://www.bloomberg.com/apps/news?pid=20601085&sid=a0dGG0Rv4vQ0