FEARS are growing that a €500 billion firewall would not be enough should Spain require a bailout.

It comes after Greece’s exit from the eurozone looks imminent, causing panic in the financial markets over the effect it would have on Spain and Italy.

The instability saw Spanish borrowing costs soar to the highest level this year (6.2 per cent) amid continued uncertainty over the banking sector.

This was heightened after the country was forced to nationalise Bankia – the fourth-largest lender – as it struggled with €32 billion of loans linked to the troubled property market.

Luis de Guindos, the Spanish finance minister, insisted the jittery markets were due to political uncertainty in Greece and not because of Spain’s economy.

“Spain has taken measures, implemented a very deep banking clean-up, to improve our fiscal situation,” he said.

“What we need now is the co-operation of the eurozone.”

EU finance ministers meanwhile met on Tuesday to discuss the crisis.

While they welcomed Spanish efforts to increase market confidence by agreeing to an independent assessment of its banking sector, it urged the government to act quickly.

“We call on the Spanish authorities to speed up the external assessment of the banking sector and to take the necessary steps to put in place credible backstop mechanisms,” said Eurogroup chairman Jean-Claude Juncker.

Greek president Karolos Papoulias is making a final attempt to create a coalition government after previous efforts failed, although new elections are widely seen as inevitable.

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