The Spanish region of Murcia became the third to say it willneed emergency loans, and Valencia signaled it needs funds to covercurrent and past overspending, adding fiscal pressure on PrimeMinister Mariano Rajoy.

A day after Catalonia said it needed 5 billion euros ($6.3billion) from an 18 billion-euro bailout fund announced by Rajoylast month, an official in southeastern Murcia yesterday put itsneeds at 700 million euros. In Valencia, an official who asked notto be named in line with policy confirmed remarks by economy chiefMaximo Buch to Europa Press that 3.5 billion euros would cover onlycurrent needs.

Rajoy meets in Madrid today with French President FrancoisHollande as he considers seeking a second European bailout aftersecuring up to 100 billion euros ($125 billion) in loans for banks.Rajoy hosted European Union President Herman Van Rompuy on Aug.28.

The country's regions risk overwhelming a plan to tackle theeuro area's third-biggest budget deficit. They were responsiblelast year for most of Spain's overspending, which remained nearlyunchanged from 2010 at 8.9 percent of gross domestic product.

Together with Murcia, Valencia and Catalonia, Spain's two mostindebted regions, aim to use more than half of Rajoy's last bailoutfund, created to enable regions to face bond redemptions andfinance their deficits in the second half.

“Everything depends on Andalusia now,” said Juan Rubio-Ramirez,an economist at Duke University in Durham, North Carolina. “IfAndalusia asks for aid, it could be a similar amount to Cataloniaand that means the fund may not be enough.” Rubio-Ramirezco-authored a report this month forecasting the regions may rundeficits as high as 4 percent of GDP this year, compared with 3.3percent last year and a target of 1.5 percent for 2012.

Andalusia, one of the four largest contributors to Spain's GDPalong with Madrid, Catalonia and Valencia, doesn't rule out makinga request, a local official who declined to be identified said bytelephone. Along with Castilla-La Mancha, Andalusia, Valencia andCatalonia in June tapped 68 percent of the 17.7 billion euros ofloans set up by the government for the regions to settle theirbacklog of unpaid bills.

ECB Involvement

The four also used over two-thirds of another mechanism thatprevented regional defaults in the first half, an approximately 5billion-euro credit line from the Spanish government's bankInstituto de Credito Oficial, or ICO. The region with the highestdeficit last year, Castilla-La Mancha, hasn't yet decided whetherto tap the new fund.

Rajoy has said he'll decide whether to request more aid afterthe European Central Bank details its involvement in a bond-buyingplan aimed at lowering governments' borrowing costs. Van Rompuythis week said European authorities are ready to assist.

Economy Minister Luis de Guindos yesterday said a Europeanmechanism to lower spreads would be thrashed out at a meetingbetween EU finance chiefs in Cyprus Sept. 14-15. The yield onSpain's 10-year benchmark bond yesterday fell 2 basis points to6.46 percent, narrowing the gap with similar German maturities to5.08 percentage points.

The government has budgeted for Catalonia's needs, de Guindostold reporters in Madrid. “The government appreciates Catalonia'sefforts and has no doubt that it will continue to do what isnecessary to meet this year's and next year's deficit targets.”

Catalonia may not be able to pay bills until it receives aid,news agency Efe reported, citing spokesman Francesc Holms. Withtheir debt rated junk by at least one rating company, Valencia andCatalonia started losing access to capital markets in 2010,prompting them to rely on selling securities known as patriot bondsto their residents.

The regions have a combined debt load of 145 billion euros,which has doubled since 2008 to the equivalent of 14 percent ofgross domestic product. Redemptions will amount to about 15 billioneuros in the second half of this year, according to data from theBudget Ministry.

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