The Economista daily said the government wanted a line of credit to cover 28 billion euros ($34 billion) in debt maturing in October since raising the money on the financial markets was now too expensive.

"What is at stake here is to avoid an imminent financial collapse," the newspaper said.

Spain's borrowing costs have soared in recent days to well above the danger line of 7.0 percent, hitting levels that forced Greece, Ireland and Portugal to seek EU-IMF bailouts.

The yield or rate of return on the benchmark 10-year Spanish government bond was higher again Tuesday, at 7.563 percent, while Madrid also had to pay investors more to raise 3.05 billion euros in short-term funds.

El Economista, citing unnamed government sources, said the new European aid, on top of last week's bank rescue deal worth up to 100 billion euros, would be in the form of a "modified global bailout."

A full bailout would be too costly, it said, because the Spanish economy is the fourth largest in the eurozone and bigger than those of Greece, Ireland and Portugal combined.

Analysts say that to avoid disaster, Spain needs the European Central Bank to step in quickly and buy up Spanish government bonds so as to bring down its borrowing costs.

In December and February, the ECB provided the bloc's banks with about one trillion euros, flooding the system with liquidity so as to ease tensions on the markets, but this tactic worked only for a short time.

The ECB has also acted directly by buying government bonds on the secondary market but it has not done this for some time and analysts now believe that it should do so again to take the pressure off weaker eurozone states.