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Spain sells government bonds at lower rates

Spain's Prime Minister Mariano Rajoy speaks during state of the nation debate at the Spanish Parliament in Madrid, Spain, Wednesday, Feb. 20, 2013. (AP Photo/Andres Kudacki)

MADRID (AP) -- Spain has paid lower interest rates to raise €4.2 billion ($5.7 billion) in an auction of bonds, suggesting improved investor confidence in the government's financial outlook.

The Treasury said it sold €2.6 billion in 10-year bonds Thursday at a rate of 5.20 percent, compared with 5.40 percent at the last such auction Jan. 22.

It sold €1.1 billion in two-year bonds at a rate of 2.54 percent, compared with 2.82 percent on Feb. 7.

It also placed €548 million in six-year bonds with the rate falling to 4.27 percent, from 4.67 percent in December.

Spain's borrowing costs have fallen sharply in recent months since European authorities announced new measures strengthening investors' confidence that the country would be helped, if needed, to handle its debt.

The economy remains mired in recession, however, with 26 percent unemployment.