Spain's public debt rose to a 10-year record and bad debt at its banks struck a 14-year high, central bank figures showed today, grim news for a country battling market fears of a looming debt crisis.

The public debt rose 16.3% to €611 billion in the third quarter from the same time last year, and it now the equivalent of 57.7% of gross domestic product (GDP) - its highest proportion since 2000.

The figure is still below the limit of 60% of GDP imposed on European Union members but it is up from the 53.2% posted at the end of 2009.

Adding to concerns over the country's finances, the central bank said Spanish lenders' non-performing loans ratio rose to 5.66% in October, up from 5.49% in September and its highest level since January 1996.

Unpaid loans on Spanish banks' books have been rising steadily since the bursting of a decade-long property bubble at the end of 2008 which caused the unemployment rate to soar to around 20%, the highest level in the EU.

Total bad debt held by Spanish banks rose to €103.7 billion in October from €101.3 billion in September as property-related losses mounted, the central bank said.

The latest central bank figures come as Spain is battling speculation on world markets that it may be forced to follow in the footsteps of Greece and Ireland and seek a bail-out from the EU and the International Monetary Fund.

A rescue for Spain would be far bigger than anything seen to date in Europe: its economy is twice the combined size of Greece, Ireland and Portugal, which markets fear also may need aid.

Credit agency Moody's, which trimmed Spain's sovereign debt rating from top-notch Aaa to Aa1 in September, said earlier this week that it had put it the country on review for a further cut.

It blamed three factors for the credit warning: Spain's vulnerability because of high funding needs next year; the risk that banks may need more money than expected to recapitalise; and concerns over Madrid's ability to control spending by semi-autonomous regions.

Spain's 17 regions have considerable autonomy, with the right to issue bonds to finance their expenses. They account for around one-third of general government expenditures - and just over half of the nation's total number of civil servants.

While the central government's debt rose in the third quarter from the same time last year by 15% to €467.4 billion, the total debt of the 17 regions jumped 27.4% during the period to €107.6 billion.

Last month Spanish Finance Minister Elena Salgado said two of the 17 regions, Murcia and Castile-La Mancha, had a 'significant' risk of being unable to meet their deficit targets for this year and would not be allowed to issue bonds until they are back on track.

On Monday, New York-based Moody's also reiterated its negative outlook on Spanish banks and warned that their total economic losses could reach €176 billion, of which the banks had so far only recognised €88 billion through write-downs and reserves.