It’s the greatest enigma of European finance at the moment, a world where the casual observer might be forgiven for thinking up is down and bad is good.

First, the bad news.

On Thursday, in a development that gave ammunition to vocal critics of the sector, the Spanish central bank reported the loan-loss ratio being faced by that country’s lenders jumped sharply in August, to 10.5 percent. That figure, analysts at other institutions who have long been skeptical of the overall health of Spanish finance noted, meant the banks were getting closer to the “worst-case outcome” experts had estimated as part of a industrywide "stress test" published last month.

Two days before that, on Tuesday, ratings agency Standard & Poor’s downgraded 15 major financiers in the country -- including the two biggest ones seen as the more stable global players -- in a follow-up action to a sovereign downgrade seen last week.

And a day before that, rumors of a bailout request that leaders in Spanish finance have been eagerly waiting for Madrid to make turned out to be just talk.

To those that have been watching only the news ticker, indeed, it would appear it hasn’t been the best of weeks for Spanish banking.

To those watching the stock ticker, however, it’s seemed like a splendid week for Spanish banks, with publicly traded issues of the largest ones rising precipitously over the course of a few days, sometimes even notching double-digit gains.

Madrid-traded shares of Banco Bilbao Vizcaya Argentaria SA (NYSE:BBVA), for example, have risen 11.3 percent from last week’s close until Thursday’s settlement of €6.638. Banco Santander SA (NYSE:SAN) shares saw a more modest jump of 4.5 percent over the same period. Banco Popular Español issues were up 5.3 percent. Battered Bankinter SA rose 9.12 percent.

Perhaps most remarkably, nationalized Bankia SA, an institution whose name is a byword for the crisis in Seville and Barcelona, was up an astounding 29.7 percent.

What gives?

The most common explanation is that banks are just surfing the crest of a rally in risky Spanish assets this week, which has raised the benchmark IBEX 35 Index of stocks by 5.3 percent. That upswing has come on two positive developments: the fact the country was able to comfortably sell short-term debt in the international markets and the news Wednesday that ratings agency Moody’s had decided not to follow its peer in downgrading the country, instead reaffirming Spain’s credit rating to just above junk.

“It’s been the case that Moody’s has respected the current Spanish rating,” Jose Luis Carpatos, an analyst at Madrid-based Serenity Markets, wrote in a note Wednesday, noting “the bourse has understood that there really is no reason now not to ask for the rescue, and up it’s gone.”

“The ECB’s ‘put’ continues to be absolute, and no one dares short against it. The momentum is rising,” he added.

It’s a bet that behind the current posturing by Spain, which wants the stabilizing benefits to its markets of looking like it’s about to be grabbed by the European safety net without having to actually jump into it, everything will work out as planned in the end.

But there are risks to going forward with that world view.

Monday, for example, local El Mundo quoted Fernando Restoy, deputy governor of the Bank of Spain, as saying it was likely the government would lose some of its money in the upcoming bailout of its weakest banks as “in principle, one can’t expect that the total amount injected into these entities will be recovered in full.”

Should that view hold, it would be highly detrimental to the valuation of the banks. And then there’s the economy, which, regardless of how many interventions central banks undertake to save the financiers, still has to get better for the system to hold up in the end.

As Thursday’s report from the Bank of Spain shows, it’s not.

“The adverse scenario of the test looks closer to a forecast of economic performance over the next three years than a stress case,” Ebrahim Rahbari, a London-based economist at Citigroup, told Bloomberg Thursday. “That surely has consequences for loan-loss rates, and the one we are most concerned about is household mortgages.”

Time to watch and wait.