MADRID — Spain's prime minister warned that the country faced the real danger of being locked out of international markets as investors continued to fret about the future of the euro amid increasing concerns over Greece's future in the single currency bloc.

At one stage, the difference between the interest rates demanded by investors for Spanish and German 10-year bonds shot past the 500 basis point level, prompting Mariano Rajoy's warning over the country's ability to continue funding itself.

The so-called spread later eased to 482 basis points but with mounting speculation that Greece may leave the euro in the coming months, it was a loud and clear signal that investors are getting increasingly fidgety about the survival of the currency and whether the Spanish government can push through its deficit-reduction plan at a time of recession and mass unemployment.

"Right now there is a serious risk that (investors) will not lend us money or they will do so at an astronomical rate," Rajoy told Spanish lawmakers. Spain has to pay 30 billion euros this year just in interest on its national debt.

Rajoy's comments came as the spread between Spanish and German bonds hit its highest level since the euro was introduced in 1999. That matters because it not only increases the government's borrowing costs at the next bond auction but will also hurt businesses trying to find credit.

"The spread has risen a great deal, which means it's very difficult to finance oneself and to do so at a reasonable price," said Rajoy.

Speaking to journalists, Rajoy also said the measures Spain was taking were the correct ones but felt the European Union could do more.

"The euro needs to be strengthened. I don't want Greece to leave the euro," he said. "I think that would be a big mistake, very bad news, and I believe public debt sustainability must be guaranteed and all of us must fulfill our commitments,"

Emilio Ontiveros, head of Madrid-based consultancy AFI, said the 500-point spread was a key psychological barrier. A 500-point spread reflects uncertainty not just about Spanish public finances but about the Spanish economy in general, he said.

"Now, more than ever, it is necessary for the European Central Bank — the only entity with enough firepower to stabilize debt markets — to intervene consistently by buying bonds, not just Spanish ones but probably also Italian ones, and from then on give clear signals that maintaining the eurozone is a priority because otherwise Europe could fall apart," Ontiveros told Cadena SER radio.

A 10-year yield of 7 percent is considered unsustainable over the long term. Greece, Ireland and Portugal were suffering such rates prior to seeking bailouts last year.

Spain's yield rose to a 6.7 percent high last November prior to elections that saw the conservative Popular Party government sweep to power on promises of major reforms.

The reforms covering the labor and financial sector have so far failed to calm investor nerves or improve Spain's stricken economy, which is languishing under the weight of a 24.4 percent unemployment rate. The economy is predicted to contract by 1.7 percent this year.

Two of the country's main problems are overspending by regional governments and banks burdened with billions of euros in bad loans following a real estate crash that started in 2008.

A major concern is that bank failures might swamp public finances and that the government will be unable to carry through its austerity measures and reforms.

The measures are aimed chiefly at slashing the government's deficit from 8.5 percent of economic output to below the maximum level set by the European Union of 3 percent by 2013. For this year, the goal is 5.3 percent.

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Wednesday also saw Spain's Ibex 35 stock index down by 0.3 percent in early afternoon trading, continuing its strongly negative trend of recent weeks.

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Daniel Woolls contributed to this report.

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