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Spain debt rises as bond rate stays in danger zone
Spain crisis: Bond yield dips slightly but remains in danger zone that forced bailouts
By The Associated Press

MADRID (AP) ' The level of Spain's debt rose in the first three months of the year, according to figures from the country's central bank.

The Bank of Spain said in report released Friday that as of the end of the first quarter, Spain's total debt ' central, regional and local governments ' now stands at 72 percent of GDP. That compares to 65 percent as of the same quarter last year and 68.5 percent at the end of 2011. The government has already said the rate will hit 80 percent by years end, and that was before it agreed to accept a bailout of up to '100 billion ($125 billion) to prop up its fragile banking system.

News of the country's rising debt levels came as the country's closely watched borrowing rate dropped slightly Friday but remained dangerously close to the level that forced Greece, Ireland and Portugal to ask for bailouts of their public finances, and the central bank reported the country's overall debt up sharply.

The interest rate ' or yield ' on the country's benchmark 10-year bonds slipped Friday morning to 6.82 percent ' still close to the 7 percent level considered by analysts to be unsustainable in the long term. It closed at a euro-era record high of 6.87 percent Thursday. Stocks in Madrid rose 1.4 percent.

Investors across Europe took heart from speculation that central banks around the world are gearing up for action to boost economies threatened by the eurozone's financial crisis.

Meanwhile Prime Minister Mariano Rajoy met with EU Competition Commissioner Joaquin Almunia, a fellow Spaniard. Rajoy's conservative Popular Party has accused him of being disloyal to the country by discussing publicly details of the bailout, such as the interest rate and the possibility of Spain having to close down some banks altogether.

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