The Spanish government's latest round of austerity measures failed to reassure investors and markets Thursday as the country's borrowing costs started to rise again.

The interest rate, or yield, on Spain's 10-year bonds - an indicator of how risky markets consider a country's debt - rose to 6.63 percent, up eight basis points from the start of trading.

The jitters came a day after Prime Minister Mariano Rajoy announced a sweeping program of tax hikes and spending cuts designed to trim (EURO)65 billion ($79.69 billion) off the budget deficit through 2015.

Civil servant wages will be cut, VAT taxes on sales of goods and services will rise and unemployment benefits will be trimmed, among other measures.

The country's Ibex-35 stock index was down about 2 percent in early afternoon trading.