Spain says has not, will not make EU aid request

Spain's economy ministry has said it had not made a request for economic aid from the EU, after a newspaper report that the EU was preparing to activate a package in case Madrid asked for it.

“This is lie. There's no rescue. There's nothing asked for, nor will there be, nothing, but nothing. I don't know where they got this from,” an economy ministry spokesperson told reporters. Without citing sources, the FT Deutschland said the EU was preparing for an aid application in the months ahead for access to the fund set up to lend to eurozone countries that run into Greek-style payments problems.

Specifically, Spain might need the aid if the problems at the Spanish banking sector get worse, the report said.

However, it also cited an unnamed European Commission spokesman as saying there were no signs of a Spanish aid request at the moment.

Spain has suffered from fears that a debt crisis contagion will sweep the eurozone, particularly affecting the bloc's weaker southern members, after Greece needed to be bailed out by the EU because of its debt problems.

But Spain saw solid demand for a new three year benchmark bond on June 10, a positive sign for the Treasury ahead of a 16.2-billion-euro ($19.50bn) redemption in July.

Spain's unpopular minority Socialist government is having a difficult time pushing through austerity measures and reforms aimed at restoring the economy back to health and is in the midst of a massive restructuring of its banking sector.

An austerity package aimed at slashing a deficit of 11.2 percent of GDP to three percent of GDP by 2013 passed parliament by just one vote in May.

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