Spanish bond yields rose to the highest in more than a week asinvestors speculated the 100 billion-euro ($125 billion) bailoutfor lenders may fall short, while binding the banks and sovereignmore closely together.

The lifeline from the euro area, aimed at loosening theconnection between banks and the state, risks doing the opposite asforeign investors continue to shun the nation's bonds and PrimeMinister Mariano Rajoy's government grows increasingly dependent ondomestic lenders.

“This 100 billion will be added to the public finances of Spain,so it just reinforces the link between banks and the sovereign,”Olly Burrows, credit analyst at Rabobank International, said in aphone interview from London. “Spain is receiving funds to bail outits banks, which have been buying Spanish debt while everyone elsehas been getting out.”