MADRID, Oct. 17 -- Spanish stocks rallied on Tuesday with the major index up 3.41 percent to 7,940.2 points at market close, buoyed by expectations that Spain may ask for a bailout from the European Central Bank (ECB).
Shares of Spain's two largest banks, BBVA and Banco Santander, closed higher, despite their downgrading by Standard and Poor's, which also downrated nine other Spanish banks. Banco Santander rose by 4.32 percent while BBVA climbed by 5.98 percent.
Spain's risk premium fell on the IBEX-35 stock market in Madrid, dropping to 426 points after having ended on Monday on 434 points. Meanwhile, the interest rate on Spain's ten-year bond fell to a low of 5.7 percent, before ending the day on 5.8 percent.
The improvement on the IBEX-35 stock market in Madrid came amid expectations for a possible bailout for Spain. The Ministry of Economy said that Spain would be willing to ask for another credit line and request the ECB to buy Spanish bonds on the market.
Despite the optimism, the Spanish government said that this request will not be made during this week's European summit that will be held in Brussels on Thursday and Friday.