Spain sold 3.2 billion Euros of short-term bonds in auction that consist of 12 and 18 month bonds. The borrowing costs rose on Spain as the average yield on 12 month bonds rose to 2.62% from 1.42% but the demand was stronger than the previous as bid-to-cover ratio was 2.9 times comparing to 2.1 in the previous auction.

The average yields on 18-month bills almost doubled to reach 3.11% compared to the previous yield the country paid at 1.71%, but the bid-to-cover ratio rose to 3.8 compared to 2.9 times in the previous. These high yields reflect how investors are worried over the country's fiscal outlook.

The yield on 10-year Benchmark Spanish bonds remained extremely high near the psychological important 6% level after it exceeded this level yesterday.