Spain enjoyed slightly lower interest rates in a bond auction this morning, a sign that market fears of a spreading euro zone debt crisis are easing despite the turmoil in Portugal.

The Treasury said it sold €4.13 billion of three-year bonds at an average yield of 3.569%, down from 3.592% in the last comparable auction on March 3.

Demand was strong with offers of €7.4 billion, allowing the Treasury to sell an amount within its target range of €3.5 billion to €4.5 billion.

The auction attracted close attention from the markets following last night's announcement by Portugal that it will seek financial assistance from the EU to ease its debt woes.

Analysts said the market appeared to have drawn a line between Spain and the three other struggling euro zone countries - Ireland, Portugal and Greece.

Spain today sought to distance itself from Portugal's request, insisting it was 'not at risk' of seeking a similar bail-out for its economy.

Concerns that euro zone debt troubles could spread to Spain pushed bond rates sharply higher last year, adding to the costs of servicing the country's sovereign debt.

Fears that Spain may be forced to seek a rescue by the European Union and IMF appear to have eased since then as the country has strengthened bank balance sheets, cut spending and pursued economic reforms.