Spain pays sharply lower rates in bond auction

Spain's Treasury has sold nearly €4 billion in short-term debt auctions that saw investors accepting much lower interest rates, reflecting easing concern that the country will need a full-blown bailout.

The Treasury says it sold €1.67 billion in three-month bills at an average interest rate of 0.95 per cent, down from 2.43 per cent in the last such auction July 24.

It sold €1.93 billion in six-month bills on a yield of 2.03 per cent, down from 3.69 per cent.

Demand was strong for both bills.

Spain's borrowing rates have fallen back recently on hopes the European Central Bank will intervene in markets to lower them, helping Spain avoid needing a sovereign bailout.

The sale Tuesday comes ahead of talks between Prime Minister Mariano Rajoy and European Council President Herman van Rompuy.

AP