MADRID (AP) ? Spain raised ?4.8 billion ($6.2 billion) in a debt auction Thursday that saw strong demand and a drop in a benchmark interest rate, a sign that European plans to ease the debt crisis have helped investor confidence.
The Treasury sold ?859 million in benchmark 10-year bonds at an average rate of 5.67 percent, down from 6.65 percent in the last such auction Aug. 2. Demand was 2.8 times the amount offered. It sold another ?3.94 billion in three-year bonds at a rate of 3.84 percent, up from 3.6 percent.
The total raised was ?300 million more than planned.
Spain's borrowing costs have fallen from unsustainable highs since the European Central Bank in August unveiled plans to buy the bonds of financially weakened countries. The plan, along with financial aid from Europe's bailout funds, would come with strings attached, however. Madrid has said it may apply for the aid if the terms are reasonable but has so far not made an official request.
But while market sentiment may be improving, Spain's battle to regain investor trust in its government finances has had tough consequences for households and businesses.
The economic crisis has left the country with near 25 percent unemployment and austerity measures and reforms aimed at reining in debt have triggered street protests and sparked some regional tensions.
Thursday's bond sale came as Catalonia regional government president Artur Mas met conservative Spanish Prime Minister Mariano Rajoy for talks on his demand for greater fiscal powers so that his powerful northeastern region can better manage its debt and deficit burdens.
The talks are the first since Mas led a massive rally in Barcelona last week that was seen as a show of strength for the region's pro-independence camp and something of a warning to Madrid.
Rajoy is opposed to both extra fiscal powers for the region as well as the idea of any of the 17 regions breaking away from the Spanish state.
Catalonia is Spain's most economically powerful region but also the one most in debt ? it has asked for ?5.02 billion from a central government fund.
On Tuesday, in remarks seen as referring to the Barcelona rally, King Juan Carlos called on Spaniards to remain united to combat the crisis.
The king said that these were decisive moments for Spain and Europe and that "chasing chimeras" and "inciting dissension" was the worst way out.
News reports say that if Mas is not granted extra fiscal powers he may call early regional elections that could turn into a referendum on independence and cause further problems for the central government.
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