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Spanish borrowing costs soar as Bankia looks for a bailout

Concern over the bailout plans for troubled Spanish lender Bankia and the country's ability to finance itself has sent the nationalised bank's share price plummeting and Spain's borrowing costs soaring.

Bankia's shares were down 21% to €1.23 (98p) after trading yesterday following the bank's announcement on Friday that it will need €19bn (£15.2bn) in state aid - the country's biggest bailout - to shore itself up against its bad loans. The shares had closed at €1.57 (£1.25) before trading was suspended on Friday.

Investors remained nervous over Spain's finances and whether it might soon join the ranks of Greece, Ireland and Portugal and seek an international bailout.

The interest rate, or yield, for 10-year bonds on the secondary market - a key indicator of market confidence in Spain's ability to raise funds - jumped 17 basis points in morning trade yesterday to 6.46%. A rate of 7% is considered unsustainable.

In comparison, Germany's bonds, seen as a safe haven investment, were at 1.38%, 508 basis points lower than Spain's.

Trading on Madrid's main Ibex 35 share index was down 1 %.

Bankia S.A., a fusion of seven savings banks - was one of the banks hardest hit by Spain's property collapse.