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Spain Bailout Prompts Bond Selling, Binds State to Banks

Spanish bond yields rose to the highest in more than a week as investors speculated the 100 billion-euro ($125 billion) bailout for lenders may fall short, while binding the banks and sovereign more closely together.

The lifeline from the euro area, aimed at loosening the connection between banks and the state, risks doing the opposite as foreign investors continue to shun the nation’s bonds and Prime Minister Mariano Rajoy’s government grows increasingly dependent on domestic lenders.