The Spanish treasury on Thursday successfully sold treasury bonds worth 2.1 billion euros (2.65 billion U.S. dollars) on the market.

A total of 611 million euros worth of 10-year bonds went for interest rates of 6.044 percent, which is slightly above the 5.743 percent of the previous issue.

Meanwhile, 638 million euros worth of two-year bonds lifespan fetched an interest rate of 4.335 percent, compared to 3.463 percent at the previous auction. The remaining 825 million euros four-year bonds sold for an interest of 5.353 percent, slightly above their rate of 4.319 percent in April.

Thursday's bond issue was seen as a test of the country's credibility after Spain's banking system was rocked by a series of crisis including its fourth largest bank Bankia being part-nationalized and asking for a 19-billion-euro bailout.

The prospect of a possible EU bailout for Spain created uncertainty at the start of the week, despite the Spanish government reiterating they were not planning to approach European rescue funds for help.

The worries pushed the Spanish risk premium to record levels of over 500 points. After Thursday's auction, however, the risk premium dipped below the 500 point level for the first time in almost a fortnight, falling to 493 points.

The European Central Bank on Wednesday announced its intention of reducing interest rates in July. Talks between the Spanish government and the EU to channel European Financial Stability Facility (EFSF) funds through the Fund for Orderly Bank Restructuring (FOBR) have also reduced tensions within the Spanish stock market.

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