UPDATE 2-Spain says has not, will not make EU aid request

(Adds European Commission denial)

By Paul Day

MADRID, June 11 (BestGrowthStock) – Spain’s economy ministry said on
Friday it had not made a request for economic aid from the
European Union, after a newspaper report that the EU was
preparing to activate a package in case Madrid asked for it.

“This is a lie. There’s no rescue. There’s nothing asked
for, nor will there be, nothing, but nothing. I don’t know where
they got this from,” an economy ministry spokesperson told
Reuters.
Without citing sources, the FT Deutschland said the EU was
preparing for an aid application in the months ahead for access
to the fund set up to lend to euro zone countries that run into
Greek-style payments problems.

Specifically, Spain might need the aid if the problems at
the Spanish banking sector get worse, the report said.

However, it also cited an unnamed European Commission
spokesman as saying there were no signs of a Spanish aid request
at the moment.

A Commission spokesman, speaking on the record, echoed
Madrid’s denial, saying Spain had made no request for financial
aid and that Brussels was not preparing for one.

“We are not preparing anything — it is speculation,” Amadeu
Altafaj told a regular news briefing. “The Spanish economy
ministry has strongly denied this. There is no such request or a
plan to table such a request.”

Spain has suffered from fears that a debt crisis contagion
will sweep the euro zone, particularly affecting the bloc’s
weaker southern members, after Greece needed to be bailed out by
the EU because of its debt problems.

But Spain saw solid demand for a new 3-year benchmark bond
on Thursday, a positive sign for the Treasury ahead of a
16.2-billion-euro ($19.50 billion) redemption in July.

Markets did not react to the FT report on Friday.

The 10-year Spanish/German government bond yield narrowed to
189 basis points from 191 late on Thursday, with analysts saying
a string of successful bond auctions this week, from Belgium and
Portugal as well as Spain, had calmed some market jitters about
peripheral euro zone debt.

Spain’s unpopular minority Socialist government is having a
difficult time pushing through austerity measures and reforms
aimed at restoring the economy back to health and is in the
midst of a massive restructuring of its banking sector.

An austerity package aimed at slashing a deficit of 11.2
percent of gross domestic product to 3 percent of GDP by 2013
passed parliament by just one vote in May.

Investing Tools
(Additional reporting by Jan Strupczewski, writing by Sonya
Hepinstall, editing by Mike Peacock)

UPDATE 2-Spain says has not, will not make EU aid request