Spanish bond yields also soared as it emerged that its banks borrowed a record €316.3bn from the ECB in March.
Spanish stock markets fell 3.6% to a three-year lowon Friday as concerns mounted that the country will become the next weak spot in the eurozone debt crisis and it emerged that Spanish banks had increased their reliance on cheap loans from the European Central Bank in March, borrowing almost double what they did in February.
The financial institutions, virtually blocked out of wholesale credit markets, borrowed a record €316.3bn from the ECB in March.
The Bank of Spain's figures, compared with February borrowings of €169.8bn (£139bn), sent the cost of insuring Spanish debt against default to a record high and came just before Spain tests market appetite for its debt next week.
The ECB has supplied eurozone banks with around €1tn of cheap, three-year loans in two tranches in December and February, a lifeline for battered Spanish lenders struggling to find short-term financing.
However, while the ECB's liquidity boost has proved a lifeline for Spain's banks, it could be only a temporary fix to a deeper problem of heavy property liabilities and fading confidence, economists said. Read More