Spain's Treasury sold (EURO)4.4 billion ($5.41 billion) in a short-term debt auction that saw interest rates down sharply amid growing speculation the recession-struck country will seek a bailout to help it manage is finances.

The Treasury said Tuesday that it sold (EURO)3.5 billion in 12-month bills at an average interest rate of 3.07 percent compared to 3.92 percent in the last such auction July 17.

It sold (EURO)981 million in 18-month bills on a yield of 3.33 percent, down from 4.24 percent.

Demand was almost double the amount offered in the 12-month bills and four times for the 18-month bills.

Spain's borrowing costs have fallen from unsustainable highs earlier this month after the country said it might seek aid if the conditions are reasonable.