By Simon Miller

Spain's borrowing costs have risen again but have avoided passing the damaging 6% benchmark.

With interest rates on existing 10-year bonds rising above the 6% mark, considered to be the mark where borrowing becomes unavoidable, the troubled eurozone economy saw maximum particpation in the €2.54bn (£2.08bn) of bonds with 10-year bonds sold at a yield of 5.743% compared with 5.403% in February with demand almost double the amount sold.

Two-year bonds dropped to 3.463% from 3.495% in October.

Spain held a short-term bond auction on Tuesday at which the rate for 12-month bonds rose to 2.6% from 1.4% at the last auction in March, while 18-month bonds were up from 1.7% to 3.1%.

The avoidance of the 6% benchmark came as a small piece of good news following data from the Bank of Spain noting that bad bank loans touched an 18-year high in February with non-payment for three months or more rose to 8.15% of total loans.

Meanwhile, despite election uncertainty, France saw bond sales oversubscribed with €3.5bn of two-year debt at an average yield of 0.85%, €1.7bn of three-year debt for 1.06% and €2.6bn of five-year debt for 1.83%.

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