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Spain Crisis: Pressure Eases On Key Borrowing Rate

CIARAN GILES

MADRID (AP) â¿¿ Spain's finance minister insisted again Wednesday that the country does not need a full-blown bailout, even as the country's sky-high borrowing costs remained at dangerous levels.

The interest rate, or yield, on the Spanish benchmark 10-year bond fell nearly 27 basis points to 6.73 percent, below the 7 percent level it has been hovering above since Monday. Such high rates are considered by market-watchers to be unsustainable over the long term rate and eventually forced Greece, Ireland and Portugal to ask for international financial help.

But Finance Minister Cristobal Montoro told Parliament that Spain won't need the same kind of assistance "because it does not need to be rescued."

After years of insisting its banks were among the healthiest in Europe, Spain recently acknowledged it will need a rescue package to protect the sector from a property boom that went bust in 2008. But investors are now more concerned that the country itself may have to be bailed out and this could seriously test the strength of the entire European Union's finances.

Thousands of Spanish union members protested on the streets of Madrid Wednesday night against waves of austerity measures pushed through parliament over the past five months by the new conservative administration of Prime Minister Mariano Rajoy.

They said his moves to prevent Spain from having to accept a public finance bailout are destroying the eurozone's fourth-largest economy, mired in its second recession in three years with unemployment of nearly 25 percent.

Demonstrator Silvia Mureil said she wants Rajoy to "explain where the jobs their reforms and austerity package were supposed to create have gone."

"I think the government should consider a rescue package for the country's workers rather than just the banking sector," said the 37-year-old physician's assistant. I don't believe bailing out the banks is going to get credit flowing, so I'm calling on our leaders to think about putting money into the welfare state instead of the banks."

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