MADRID (AP) â¿¿ The level of bad debt in Spain' banks resumed its upward spiral in January, rising to 10.78 percent, the central bank said Tuesday. Bank data showed non-performing loans totaled â¿¬170.7 billion ($220.9 billion) in the first month of the year, up from â¿¬167.5 billion the previous month. December had seen the bad loan ratio dropping to 10.44 percent from a record 11.38 percent in November following the transfer of toxic assets to the country's new bad bank â¿¿ a fund that collects the non-performing loans from banks. It was the first reduction in 17 months. Spanish lenders, hit by the country's real estate crash in 2008, have been transferring toxic loans to the country's bad bank, known as SAREB. The body was set up as a condition for Spain receiving â¿¬40 billion in European Union assistance for its financial sector. With 26 percent unemployment, Spain is struggling to emerge from its second recession in just over three years. Also Tuesday, the Treasury raised â¿¬4 billion ($5.2 billion) in short-term debt at a lower cost in the latest reflection of growing investor confidence in the government's handling of the economy. It sold â¿¬2.26 billion in nine-month bills at a rate of 1.01 percent, down from 1.14 percent in the last such auction Feb. 19. It placed â¿¬1.73 billion in three-month bills at a yield of 0.29 percent, compared with a previous 0.42 percent. The amount sold met the Treasury's target while demand was more than double the total offered. Spain's borrowing costs have dropped in recent months with investors less wary since European authorities announced the country would be helped, if needed, to handle its debt.