Spain, under pressure to spell out whether it needs more financial support, told euro zone finance ministers on Friday it will present a new set of structural economic reforms with firm deadlines by the end of the month.
Madrid's borrowing costs have fallen sharply since the European Central Bank said it was ready to buy its bonds but the scale of debt repayments it faces before the year-end and a deepening recession mean most analysts and policymakers believe it only a matter of time before it requires help.
"We will adopt a new set of reforms to boost growth... It will be in line with the recommendations of the European Commission," De Guindos told journalists after meeting his peers in Cyprus. A detailed timeline would be attached.
The commitment to detail new measures this month suggests a request for aid is nor far away, although de Guindos insisted the plan was unrelated to any possible bailout terms. Several euro zone officials have speculated Spain could apply in time for the next meeting of euro zone finance ministers on Oct. 8.
Madrid has so far resisted austerity conditions that go beyond the EU policy recommendations it is already implementing, while north European creditors led by Germany are adamant that any aid would come on tougher terms.
The ECB has said a request for help from the euro zone's bailout fund, and the negotiation of strict, time-bound policy conditions and monitoring, is essential to trigger its bond-buying intervention in the secondary market.
ECB President Mario Draghi, who attended the Nicosia talks, stressed any bond-buying would require strict conditionality.
Spain's 2013 budget and a detailed audit of the capital needs of its banking sector are both due on Sept. 28.
For the first time in months, ministers met at a moment when market pressure for immediate action to solve the sovereign debt crisis is easing, rather than mounting.
The ECB's announcement that it could buy unlimited amounts of Spanish bonds, should it agree a programme with the euro zone bailout fund, brought Spanish 10-year bond yields down from 7.64 percent on July 24 to 5.62 percent on Thursday.
Italian yields have fallen to around 5 percent and the euro rose above $1.30 after the U.S. Federal Reserve announced a new programme of asset purchases to support the economy.
That increases the temptation for Spain, and EU paymaster Germany, to try to get by without an assistance programme that would be politically unpopular in both Madrid and Berlin. Each time market stress has eased in the nearly three-year crisis, German leaders have said they see no urgent need to act.
"There is no more room for complacency than there was six months ago, but we are moving in the right direction," European Economic and Monetary Affairs Commssioner Olli Rehn cautioned.
Spain is reluctant to ask for help because Prime Minister Mariano Rajoy fears a political backlash at home, but he may eventually have no choice given Madrid's borrowing needs.
A German official said privately that Berlin did not want to see Spain pushed into an unnecessary rescue application at a time when its funding conditions were improving, adding a Spanish bailout was not inevitable.
MORE TIME FOR GREECE?
International Monetary Fund chief Christine Lagarde said it was worth considering giving Greece more time to make the cuts demanded of it by its bailout programme.
EU officials have told Reuters that Athens is way behind on its debt-cutting programme but, having made strenuous efforts to shore up Spain and Italy, it would make no sense to tip Greece into default now and plunge the currency bloc back into chaos.
"It seems to us quite clear that Greece has already produced a huge effort but will have to continue to do so," Lagarde said. "And the target when it comes to achieving debt sustainability is very high, so there are various ways to adjust: time is one and that needs to be considered as an option."
International lenders are likely to reach final decisions on the revised financing programme for Greece in the second half of October, Greek Finance Minister Ioannis Stournaras said.
Austrian Finance Minister Maria Fekter said Greece could be given more time to reach its fiscal targets but not more money, a view shared by the Dutch.
She also said the Cyprus had told the meeting it would not be able to continue without financial assistance.
Another euro zone official said Spain should have euro zone support ready when international lenders present their report on Greece - the country where the debt crisis started - in October, because it will make grim reading and could upset markets, boosting Spanish and Italian borrowing costs.
Draghi said the central bank's policy decision was just one of a number of measures which had turned market sentiment.
"Many things seem to fall into place of late: progress in the euro area governance, significant progress at national level in pursuing the right policies in all euro area countries and now you have a fully effective backstop mechanism that is meant to remove to the tailrisk from the euro area," he said.
"I think it is a combination of all these elements that have produced the positive effects that we have seen on financial markets."
Markets have rallied after the German constitutional court cleared the way to set up the 500 billion euro permanent euro zone bailout fund ESM, pro-European parties won elections in the Netherlands and the euro zone is moving towards a banking union with the ECB as the single supervisor.
But many policymakers and market analysts believe that for yields to fall further, or even stabilise at these levels, the ECB would have to back up its words with action.
German Finance Minister Wolfgang Schaeuble launched a counter-attack against critics of the bond-buying decision, including the country's influential central bank, saying German worries of unlimited exposure to euro zone bailouts or the ECB printing money to finance debt-laden governments are unfounded.
"The ECB will not make any decisions that lead to the indirect financing of states. That would violate their mandate and they will not do it," he said in a radio interview broadcast on Friday. "I have confidence in the ECB."
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