Economy, Spain | featured news

Local governments across Spain have been paying their suppliers' bills months behind schedule, forcing companies to help shoulder the financial woes of the Spanish government.

Spain, deflecting pressure to spell out whether it needs more European financial support, told euro zone finance ministers on Friday it will set clear deadlines for structural economic reforms by the end of the month.

Spanish jobless claims rose at the slowest pace in six years in August, the country's labor ministry said, a sign that surging unemployment in the euro zone's fourth-largest economy is leveling off.

The Spanish economy is falling deeper into recession and depositors are pulling their money out of the banks, figures published on Tuesday showed, while the country's most economically important region, Catalonia, said it needed a major rescue from Madrid.

Corporate storm clouds gathered over Spain again as two major European companies joined the ranks of those saying they were taking steps to reduce exposure to the recession-hit country.

Ten-year bond yields rose above 7 percent and shorter-term issues also sold at higher cost, raising fears that recent European accords were not enough to stem the debt crisis.

Irene Fernandez lost her job with Spain's postal service five months ago, a victim of government spending cuts. Since then, she's been getting by on spending money from her mother and the $530 a month she earns grooming dogs for neighbors.

Spain's banks would need 51-62 billion euros ($64-78 billion) in extra capital to weather a serious downturn in the economy, less than a 100-billion-euro aid package offered by the euro zone, independent audits showed on Thursday.

Spain could ask for a rescue of its struggling banks this weekend when European finance ministers hold an emergency conference call Saturday to discuss the country's financial problems, a move that would make it the fourth member of the 17-nation eurozone to seek outside help since the continent's debt crisis erupted two years ago.