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Interest rates up sharply as Spain sells $3.8 billion in bonds, demand strong
MADRID (AP) Spain successfully sold 3.1 billion ($3.8 billion) in medium-and long-term bonds Thursday but at a sharply higher cost, another sign that the country is struggling to convince skeptical investors that it won't need a bailout.
The auction came hours ahead of a European Central Bank meeting at which Spain hopes some measures might be announced that might ease the pressure on its borrowing costs.
The Treasury sold 1.04 billion in 10-year bonds at an average interest rate of 6.65 percent, up from 6.4 percent in the last such auction July 5. Spain's 10-year bonds have been fetching similar yields on the secondary market for several months now.
The Treasury also auctioned 1.02 billion in four-year bonds at a rate of 5.97 percent, up from 5.54 percent. It also sold 1.06 billion in two-year bonds on a yield of 4.77 percent.
One good sign was that demand was more than double the amount offered in the four- and 10-year bond sales and nearly three times the amount in the two-year sale.
Spain is in its second recession in three years with an unemployment rate of nearly 25 percent.
Earlier, the Labor Ministry said the number of people registered as unemployed fell by 27,814 in July as more people found work in summer tourism. It said the total number of people registered as jobless is now 4.58 million. It was the fourth straight monthly decline.
Later, Prime Minister Mariano Rajoy is due to meet Italian Premier Mario Monti in Madrid.