The auction was watched closely given mounting worries that Greece’s urgent debt problems could affect sentiment in larger countries like Spain. Investors are also concerned over Spain’s ability to enforce debt cuts following the governing Socialist party’s drubbing in weekend elections.

The Treasury said it sold 998 million euros in 3-month bills at an average interest rate of 1.38 percent, up marginally from 1.37 percent in April.

It sold 1.3 billion euros in 6-month bills at a rate of 1.76 percent, down from 1.86 percent.

Demand was nearly six times the amount offered for the smaller bills and over five times the amount in the 6-month category.

“This is a better-than-expected result,” Unicredit bond analyst Chiara Cremonesi said in a note.

“Indeed, following yesterday’s pressure on Spain and Italy, we would have expected to observe a rise in cost of funding at today’s auction, especially at the 3M (3-months). We take this as a mildly encouraging sign,” Cremonesi said.

Spanish financial markets fell Monday after voters angry about austerity measures dealt the Socialists a painful defeat at the hands of the leading conservative popular Party in the local and regional elections.

Investors worried that the result indicated that the government of Prime Minister Jose Luis Rodriguez Zapatero had lost support in its drive to heal public finances.

But after losing 1.4 percent Monday, the Ibex 35 index on the Madrid stock market opened slightly positive Tuesday.

The spread, or difference in yield between the 10-year Spanish bond and the equivalent benchmark German one stood at about 246 basis points at midday, down from more than 250 late Monday. That suggests improving investor confidence.

Meanwhile, protests against austerity measures continued for a tenth day Tuesday in city squares across the country.

The groups demand a more representative political system for Spain and oppose further cuts, though crowd numbers have dwindled considerably from the tens of thousands ahead of Sunday’s election.

The election victory encouraged the Popular Party to step up pressure for the government to call early general elections, ahead of the scheduled date next March, although Zapatero has ruled this out.

Spain is burdened with a euro zone-high jobless rate of 21.3 percent and a bloated deficit after nearly two years of recession triggered by the collapse of a real estate bubble and the end of a frenzied period of free-flowing credit.