7 Jun 2012

Bailout speculation dampened

11:22 am on 7 June 2012

Spain's economy minister has dampened speculation that the country is about to seek a bailout of its bank sector.

Luis de Guindos says no decision will be made until audits of the banks are completed, possibly by the end of June.

But Spain has admitted that it is close to the point where it can no longer afford to borrow money on the international markets.

At least 80 billion euros ($US100 billion) has to be found to strengthen its banks' capital buffers.

Up to 2 billion euros of bonds are due to be auctioned on Thursday.

Forex.com research director Kathleen Brooks says no-one will trust Spain's banks until they get rid of their toxic debts.