Spanish Prime Minister Mariano Rajoy rejected the possibility that his government was close to asking for a bailout from the European Union and the International Monetary Fund, a report said Tuesday.
The Europa Press news agency said Rajoy made the denial while meeting with regional leaders of his governing party.
Reuters had earlier reported that Spain was ready to request a bailout as early as next weekend but that Germany had signalled that it should wait.
It quoted a German official it did not name as saying that Chancellor Angela Merkel preferred to bundle all bailout requests from distressed eurozone countries into one, rather than put them one by one before an increasingly reluctant German parliament.
Some investors, particularly in the currency and bond markets, appear buoyed by the speculation that the Spanish government is preparing a request for help.
Doing so will eliminate some market uncertainty.
"This has been the next big hurdle for a while, getting Spain back into a position when they can borrow in the markets at sustainable rates," said Craig Erlam, market analyst at Alpari.
The euro was down 0.02 per cent at $1.2918 US late in the afternoon while the yield on Spain's 10-year bonds fell 0.17 percentage point to 5.69 per cent.
The speculation about a bailout came a day after Spain’s Labour Ministry reported unemployment rose by almost 80,000 in September as the summer tourism season came to an end, to a total of 4.71 million.
Spain is in its second recession in three years with an overall unemployment rate of nearly 25 per cent. In addition, investors will be closely monitoring developments in Greece as the country's government is in talks with its debt inspectors over the latest batch of austerity measures.
If the inspectors refuse to sign off on the measures, Greece faces the prospect of not getting its next batch of bailout funds, a development that may lead to its exit from the euro.
A previous version of this story incorrectly identified Mariano Rajoy as president of Spain. In fact, he is prime ministerOct 02, 2012 3:40 PM ET