Spain's weak banks need at least 40 billion euros ($50 billion) in new capital to strengthen against severe financial shocks, the International Monetary Fund said.

Stress tests performed by the IMF on the country's battered banking sector indicated the top two banks, BBVA and Banco Santander, were solid.

Spain paid sharply higher borrowing costs to lure buyers for its bonds Thursday as the crisis-torn banking sector tottered towards a bailout.

The treasury raised 2.074 billion euros ($2.6 billion) in the auction of two-, four- and 10-year bonds, comfortably beating its own target range of 1.0-2.0 billion euros, Bank of Spain figures showed.

Once a haunt of the greats from Ernest Hemingway to Salvador Dali and Hollywood beauty Eva Gardner, Madrid's famous Cafe Gijon may be nearing the end of its 120-year history.

Shaded under the tall trees of the Spanish capital's Paseo de Recoletos Boulevard, the cafe's outside tables have lured artists, writers and actors since 1888.

The niece of legendary Spanish poet Federico Garcia Lorca could not contain her tears as she traced the steps of Lorca's brief, but influential New York stay on the 114th anniversary of his birth.

"It's very emotional. In some ways this closes a circle," Laura Garcia Lorca told Agence France Presse late Tuesday as she paid homage to her famous uncle, a trailblazing poet who lived in New York between 1929 and 1930, before returning to Spain, where he was killed in the first days of the civil war in August 1936.

The European Central Bank is coming under increasing pressure to come to the rescue once again as the Eurozone debt crisis deepens, with analysts suggesting it could cut interest rates soon.

The ECB's governing council usually convenes on the first Thursday of every month for its regular policy-setting session but it is meeting in the bank's Eurotower headquarters on Wednesday owing to a public holiday.

The euro plumbed two-year lows in Asia on Thursday as nervous traders ditched the single currency for safer units, including the yen and dollar, amid worries over Spain's faltering bank sector.

The euro changed hands at $1.2363 in Tokyo morning trade, against $1.2366 in New York late Wednesday, while it bought 97.54 yen, down from 97.76 yen.

A convoy of self-driving cars has taken to a public motorway in Spain in normal traffic, a world first, according to Swedish car maker Volvo.

A professional driver took the lead of the convoy in a truck, and was followed by four self-driven Volvo vehicles: a second truck and three cars, Volvo said in a statement.

Major Western powers said Tuesday they would expel Syria's diplomatic envoys in protest at the weekend massacre in the town of Houla, in which more than 100 people were killed.

The United States, Britain, France, Germany, Italy and Spain as well as Canada, Australia, The Netherlands, Bulgaria, Switzerland and Belgium announced decisions to expel ambassadors or top envoys.

Spanish Prime Minister Mariano Rajoy has admitted the state is struggling to borrow, as its risk premium hit a euro-era record and fears spread over the country's stricken banks.

Rajoy sought Monday to calm investors after the distressed lender Bankia pleaded for the biggest state rescue in Spanish history.

Spain's fourth-biggest bank, Bankia, said Friday it will ask the government for 19 billion euros ($24 billion) in the largest bank bailout in the country's history.

The bank, which holds some 10 percent of the nation's bank deposits, said the request will be part of a recapitalization plan which it approved at a board meeting on Friday and is backed by the government and the Bank of Spain.