Spain to cut spending by 8.9 billion euros in 2012; raises deficit forecast

Spain's new conservative government announced Friday 8.9 billion euros ($11.54 billion) in austerity measures in 2012, with the budget shortfall of 8 per cent of gross domestic product, well above a target of 6 per cent.

"Spain is currently benefiting from the perception among investors that its problems are less severe than Italy's given its smaller stock of public debt and lower funding requirements," said Nicholas Spiro, managing director of Spiro Sovereign Strategy in London.