(MENAFN- AFP) Spain failed to hit its maximum target in a bond sale on Thursday, further spooking markets already on edge about the state of the eurozone's stagnating economy.
Spain raised a total of 3.2 billion euros ($4.1 billion) within the range it had targeted but below the maximum 3.5 billion euros it had sought. Demand was also lower than at previous actions, at 1.5 times.
The sale added to fears the eurozone could once again be flirting with economic crisis after the ECB scrambled to allay concerns that Greece could be left floundering when it leaves its debt-rescue programme.
The cost of borrowing for weak eurozone countries such as Greece, Portugal and even larger countries like Italy surged.
European stock markets also slumped following the Spanish bond auction, with the Paris, Milan, Madrid, Lisbon and Amsterdam exchanges each fell by more than 3 percent.
Spain's Treasury sold 2.15 billion euros of 10-year bonds with an average interest rate at 2.196 percent, up from the record low yield of 2.075 percent in the last such sale on October 2.
Demand outstripped supply at the auction on October 2 by a ratio of 2.3.
Ten-year bonds are considered to be the main barometer of a country's standing on the eurozone bond market.
The Treasury also sold 1.05 billion euros in 15-year bonds with the rate falling to 2.842 percent, down from 3.514 percent during the last similar auction in May.
Spain, the eurozone's fourth-largest economy which exited recession last year, plans to borrow slightly over 242 billion euros from debt markets this year.
With this debt auction it has raised 118 billion euros of the 133 billion euros it plans to raise in medium- and long-term bonds.
Investor sentiment for Spain, which came close to requesting a bailout at the height of the eurozone crisis, had improved due to its better growth outlook and growing confidence in eurozone periphery countries.
But lower growth forecasts in Germany, the eurozone's largest economy, and ultralow inflation have fulled fears over slowing global growth and hurt sentiment for eurozone periphery nations.
Bond yields for these countries shot up on Thursday in the secondary trading markets, indicating that investors are demanding more to hold on to debt from these countries.
The yield on Spanish 10-year bonds jumped to 2.356 percent from 2.116 percent on Wednesday.
Greek 10-year bonds jumped to 8.656 percent from 7.854 percent.
Portugal rose from 3.585 percent from 3.286 percent, while Italy climbed to 2.665 percent from 2.422 percent.
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