The victory of pro-bailout parties in Greece's weekend elections did nothing to ease market pressures on Spain, which saw the interest rate on its 10-year bond climb Monday to 7.15 percent, the highest level since the adoption of the euro.
Though observers expect Greece's two traditional parties - the rightist New Democracy and nominally socialist Pasok - to form a coalition government committed to the austerity policies demanded by the European Union in exchange for the financial rescue of Athens, investor euphoria over the outcome was short-lived.
After reaching 588 basis points at midday, Spain's risk premium - the extra return investors demand on Spanish 10-year bonds compared with equivalent German debt - relaxed to a still-record 574 points by the close of Monday's trading.
Spain's finance minister, Cristobal Montoro, demanded action from the European Central Bank in the face of the markets' "insistent pressure" on Spanish debt.
"The ECB must respond with complete firmness, with complete reliability, to those markets that still try to obstruct the development of the common project of the euro," he said in remarks to the Spanish Senate about the government's 2012 budget bill.
The leader of the main opposition Socialists, Alfredo Perez Rubalcaba, echoed the conservative Popular Party government in calling on the ECB to do something about "speculation" against the euro and the Spanish economy.
Euro zone finance ministers have already approved a loan of up to 100 billion euros ($126 billion) to recapitalize Spain's struggling banking sector, but Prime Minister Mariano Rajoy's administration said it will wait for the results of two independent audits of the country's banks before putting in the formal request.
Spain's banks have been hard hit by the collapse of the country's 1995-2007 real estate boom, which has left them saddled with toxic property assets.
Recently nationalized BFA-Bankia - the country's No. 4 financial institution - is seeking what would be the largest bank bailout in Spanish history after saying on May 25 it needs another 19 billion euros ($23.5 billion) to boost loss provisions.
The 2008 global financial meltdown came as Spain was struggling with the bursting of the property bubble. The ensuing slump has led to numerous business failures and pushed the country's jobless rate above 24 percent.
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. EFE