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Spain pays higher interest rates in bond auction

MADRID (AP) -- Spain has had to pay higher interest rates to auction off 4 billion euros ($5.2 billion) in governments bonds as financial markets were unnerved by a sharp drop in global stock markets.

Spain's borrowing costs have been falling for months as investors gained confidence in the government*s management of its finances and fears of a bailout receded.

The Treasury sold 1.2 billion euros in 15-year bonds Thursday at an average interest rate of 4.54 percent, up from 4.34 percent on May 9.

It sold 1.3 billion euros in five-year bonds at a rate of 3 percent, up from 2.79 percent, and 1.6 billion euros in three-year bonds at 2.44 percent, compared with 2.25 percent last time.

Asian stocks led a drop in global markets, with Spain's index down 2 percent.