MADRID (AP) -- Spain successfully raised euro4 billion ($5.2 billion) at a bond auction Thursday, with investor appetite strong despite jitters over the economy and the Greek debt crisis, while Parliament cleared a bill to strengthen the banking sector.
The Treasury sold euro2.3 billion in three-year bonds at an average interest rate of 3.3 percent, up from 2.9 percent at a comparable auction on Feb 2.
It also sold euro733 million in another 3-year bond with a different coupon rate, and about euro1.1 billion in bonds maturing in 2019. There were no comparable interest rates for these.
Demand was 2.2, 4.6 and 3.2 times larger than supply.
The auction came as the government confirmed Spain's economy shrank by 0.3 percent in the fourth quarter of last year compared with the previous quarter.
Economic contraction is expected in the first three months of this year as well as austerity measures and budget cuts bite, meaning Spain will slip back into recession after limping out of one in 2010. The unemployment rate is at a eurozone high of nearly 23 percent.
To bring the economy back on track, the government is trying to make the labor market more competitive and bolster confidence in the financial sector.
On Thursday, Parliament passed a bill designed to strengthen the banking sector by forcing lenders to set aside billions more in provisions to cover toxic real estate assets.
The bill, whose passage was widely expected, was presented by the new conservative government last week and is expected to force mergers of weaker lenders unable to raise money to cover their exposure to a burst real estate bubble.
Economy Minister Luis de Guindos said Thursday he expects banks to need to raise up to euro52 billion ($68 billion) in new provisions, up euro2 billion from when he first announced the bill last week.
The conservative Popular Party has an ample majority in Parliament but on this bill it also had the support of the opposition Socialists.
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