UPDATE 2-Report Spain wants 280 bln euros aid is madness-PM

* Zapatero says rumours can hurt ‘interests of our country’

* Spanish stock market falls, bond spreads rise

(Updates with quotes, background)

BRUSSELS, May 4 (BestGrowthStock) – Spanish Prime Minister Jose Luis
Rodriguez Zapatero on Tuesday dismissed as “complete madness” a
market rumour that his country would soon ask for 280 billion
euros in aid from the euro zone.

He also told a news conference in Brussels that such rumours
could damage Spain’s interests and that this would be
“intolerable” and Spain would fight them.

“I was told something about that rumour and the truth is I
give it no credit, it is complete madness,” he told journalists.

“These rumours can increase differences and hurt the
interests of our country, which is simply intolerable and of
course we intend to fight it,” he said.

Spanish markets slumped on Tuesday on concerns of spreading
contagion from Greece to other indebted euro zone countries.

The IBEX (.IBEX: ) stock index slumped 5.4 percent while
Spain’s biggest bank, Santander (SAN.MC: ), skidded 7 percent
lower.

Spain’s credit default swaps jumped 49 basis points to 212
basis points on Tuesday and the spread on its 10-year bonds over
safer German Bunds rose to 116 basis points from 99 points.

Zapatero said Spain cannot be dictated to by markets.

“We cannot be watching what happens each day in the
markets,” he said. “I just stick to the facts. Spain has a
public debt to GDP ratio 20 points lower than the European
average.”

Spain’s budget deficit shot up to 11.2 percent of GDP last
year but its total debt burden, at around 55 percent of GDP, is
considerably lower than most European countries. Greece has
twice as much debt.

Zapatero’s government has promised to cut the budget deficit
to below the EU limit of 3 percent of GDP by 2013.

The prime minister said he had confidence in Spain’s public
accounts and it was strongly solvent. But his country had to
restructure its financial sector as soon as possible, referring
to the country’s indebted regional savings banks.

Zapatero, whose country holds the rotating European Union
presidency, said euro zone leaders will give their definitive
support for emergency loans to Greece at a summit on Friday.
(Reporting by Justyna Pawlak and Julian Toyer; writing by Axel
Bugge)

UPDATE 2-Report Spain wants 280 bln euros aid is madness-PM