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Interest rates rise for Spain's bond sale

Interest rates move up to 3.7 percent, up from 2.7 percent a month ago.

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Two brokers talk at the Stock Exchange in Madrid Nov. 23. Spain's borrowing costs have soared in a sale of bonds amid fears the country could be affected by contagion from Ireland's debt crisis. Interest rates rose to 3.7 percent, up a full percentage point from a month ago. Spain's economy is struggling to emerge from nearly two years of recession.

Paul White)/AP/File

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Spain has raised some €2.5 billion ($3.3 billion) in a sale of bills but has had to pay higher interest rates despite strong investor demand due to uncertainty over its debt load.

The central bank says the treasury sold nearly €2 billion in 12-month bills paying an average interest rate of 3.4 percent, up from 2.4 percent in the last such auction in November.

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For some €500 million in 18-month bills it paid a 3.7 percent interest rate, up from 2.7 percent last month.

The bank said demand was nearly triple the amount sold Tuesday.

Spain, burdened with debt and struggling to emerge from recession, has been the target of market speculation in recent months as investors worry it might need a European Union bailout like Ireland and Greece.