Spain will be offered more time to hit the budget deficit targets it agreed with the EU but only if Madrid meets new conditions, including an independent audit of the restructuring plan for its troubled banks, the Financial Times reported. The European Commission, the EU’s executive branch, has insisted on the extra conditions – which include ensuring more fiscal control over Spain’s profligate regional governments – before allowing Madrid to delay its 2013 deficit target by a year.

Spain's government will effectively nationalize the nation's fourth largest bank to shore up the hurting banking sector and try to convince investors the country doesn't need a bailout like those taken by Greece, Ireland and Portugal, the Economy Ministry said Wednesday, the Associated Press reported. Under the deal, €4.5 billion ($5.9 billion) in funding that Bankia SA received from Spain in 2010 and 2011 will be converted into shares of the institution's parent company, the ministry said in a statement.

Shares in Spain's fourth-biggest listed bank, Bankia, fell sharply Tuesday after the government said it would inject public money in the lender this week to clean up huge bad loans, Agence France-Presse reported. On Monday shares in Bankia, which has the industry's largest exposure to the property market at 37.5 billion euros ($49 billion), had lost 3.26 percent. An economy ministry official told AFP Monday that the government was "finalising a plan to clean up the bank", adding that the scheme would use public money and was likely to be announced by Friday.

Spain is planning a state bail-out of Bankia, the country’s third biggest bank by assets, in a move likely to involve the injection of billions of euros of public money into the troubled lender, the Financial Times reported. In an abrupt reversal of policy, the Spanish government, which had previously insisted that no additional state money would be needed to clean up the country’s banking sector, confirmed that an intervention was being prepared.

Marta Fernández should have been celebrating. After looking for work for months, she found a position in a media company in Madrid. But her new job, working full time for €300 a month, will barely cover her rent. She is one of the luckier Spaniards aged 25 and under, of whom more than half are languishing outside of work or education as the country suffers one of the highest levels of youth unemployment in the EU, the Financial Times reported. The abrupt end of Spain’s construction boom left thousands of young labourers without work.

Spanish oil heavyweight Repsol YPF SA has lost nearly one-fifth of its valuation after Argentina's move to seize control of YPF SA sliced off a huge chunk of the company's production and earnings. Yet, two weeks after the Argentine bombshell, some investors and analysts are starting to devise a potential upside scenario for the battered Spanish company, The Wall Street Journal reported.

Spain has joined seven other euro-zone economies in recession, according to data released Monday, providing further evidence that austerity policies are failing to regenerate confidence in the region's economies and heightening pressure on the government as the country braces for a week of antiausterity protests, The Wall Street Journal reported. Almost every piece of new economic data in recent weeks has reinforced the impression that large swaths of the European economy are contracting.

Spain’s government and its banks are discussing a new scheme to segregate problematic property loans into one or more asset management companies to relieve the burden on struggling lenders, according to officials and bankers, the Financial Times reported. The “bad bank” scheme is the latest attempt by the centre-right government of Mariano Rajoy, prime minister, to avoid an international rescue programme of the sort required by Greece, Ireland and Portugal.

Spanish officials moved to shore up confidence in the ailing local economy after new data showed unemployment at an 18-year high, after credit-ratings firm Standard & Poor's slapped Spanish government debt with a two-notch downgrade, The Wall Street Journal reported. Spain's statistics bureau Friday said the country's jobless rate rose to 24.4% in the first quarter, from 22.9% in the fourth quarter of last year, inching toward its highest level on record. More than half of workers under 25 years old were without jobs.

A YPF bond due in July next year is likely to default, and while Repsol YPF SA should escape a similar fate, this prospect could be yet another headache for the Spanish company after YPF's operations were seized by Argentina's government last week. Analysts expect that YPF's nationalization will almost certainly lead to a default on its bonds. Argentina's proposal to take over 51% of YPF would cut Repsol' stake to just 6% from 57% currently. Repsol, which denounced the takeover, has vowed to take the dispute to court.