08/04/2011 07:09 EDT | Updated 10/04/2011 05:12 EDT

Europe Debt Crisis: Spain Forced To Pay More To Borrow

Flickr: Cintia Barenho

MADRID - Spain was forced to pay sharply higher interest rates in a pair of bond auctions, reflecting raised investor fears over the country's ability to handle its debts and avoid a bailout.

The Spanish Treasury says it sold €2.2 billion ($3.2 billion) in three-year notes carrying interest rates of 4.81 per cent, and €1.1 billion of three-and-a-half year notes with a rate of 4.98 per cent.

At the last comparable bond auction on July 7, three-year bonds had an interest rate of 4.3 per cent.

Demand for Thursday's sale was more than twice supply.

After three days of steep declines for Madrid's main stock index, shares of Spanish companies were up 0.9 per cent on Thursday.