Spain's Treasury auctioned 2.5 billion euros ($3.18 billion) worth of bonds maturing in 2015 and 2016 on Thursday, but was forced to pay sharply higher interest rates.

The bond sale came amid rising tensions in the eurozone over the political and economic crisis in Greece, where new elections will be held on June 17 after failed negotiations to form a coalition government.

Demand outstripped supply in the auction by nearly three to one.

The Treasury sold 371.76 million euros of bonds maturing on Jan. 31, 2015, at an interest rate of 4.42 percent, up from 2.96 percent in the previous auction.

Another 1.02 billion euros worth of bonds maturing on July 30, 2015, were placed at a borrowing rate of 4.92 percent, compared with 4.07 percent on May 3.

Meanwhile, 1.1 billion euros of bonds maturing on April 30, 2016, were sold at an interest rate of 5.13 percent, compared with 3.43 percent in the previous issue.

Thursday's auction was the first since Spain's debt-risk premium briefly surpassed the 500-basis-point barrier on Wednesday before ending the session at 482 bps.

On Thursday, the debt-risk premium - the extra return investors demand on Spanish government bonds compared to safe-haven German debt - rose again to 490 basis points before retreating back to around 483 bps.

The yield on Spain's benchmark 10-year bond - used to determine the debt-risk premium - fell on the secondary market to around 6.33 percent after the auction.

This latest bond issue came at a time of deep concern among investors that the June elections in Greece could lead to that country leaving the euro and that the contagion could spread to other countries of southern Europe such as Spain or Italy.

Spain is planning an auction of notes maturing in three and six months later this month.

Spain has pledged to bring its deficit down to 5.3 percent of its gross domestic product this year, as required by the European Stability Pact, yet it almost must tackle sky-high employment in a contracting economy.

The 2008 global financial meltdown came as Spain was struggling with the bursting of a decade-long real estate bubble. The ensuing slump has led to numerous business failures and pushed the country's jobless rate to above 24 percent, representing more than 5 million people out of work.

Nearly half of Spaniards under 25 are jobless and tens of thousands of families have been evicted from their homes after falling behind on their mortgages.

Anger over persistent high and rising unemployment played a major role in the conservative Popular Party's landslide victory over the incumbent Socialists in last November's elections.