Financial markets speculated Friday on a vast European bailout for Spain's distressed banks as soon as this weekend, even as Madrid and other officials refused to confirm any such plan.
If gathering signs of impending intervention prove correct, it would mean the eurozone debt crisis has defied desperate attempts to contain the contagion to Greece, Ireland and Portugal.
It would also take the two-year emergency to higher level: Spain's economy is the fourth-largest in the 17-nation eurozone and is more than twice the size of Greece's, Ireland's and Portugal's combined.
"It seems it will be this weekend. That is what the market is discounting, that they will ask for it this weekend," said David Navarro, manager of variable yield securities at brokerage Inversis.
Navarro said the European Financial Stability Facility (EFSF) bailout fund was expected to issue bonds for Spain's state-backed bank restructuring vehicle, the FROB.
The FROB could then inject the bonds into troubled banks, which could sell them to raise capital, he said.
"This financing could be very good for the banks," Navarro said.
A string of top European policymakers refused to comment on reports that the Eurogroup of finance ministers would hold a weekend telephone conference call at which Spain would seek a rescue.
Most officials said only that Spain had so far made no request for a rescue, stressing however that Europe was ready to spring into action the moment that it was required.
Spain's Deputy Prime Minister Soraya Saenz de Santamaria said "no decisions have been taken of any kind" before the scale of the banks' capital needs was known.
The Bank of Spain said an independent audit of Spain's banking system, examining how much extra capital needs to be pumped in, would be submitted by June 21.
A second, more detailed examination to be carried out by Deloitte, KPMG, PwC and Ernst & Young, is due by July 31.
In Brussels, European Commission spokesman Amadeu Altafaj said he could not confirm any conference call on aid for Spanish banks. "The tools are in place, but at this point in time there is no request," he said.
German Chancellor Angela Merkel, too, refused to comment on the reports. "We have everything we need for a stable eurozone and it is up to the individual countries to come to us. That has not happened," she said.
A rescue might soothe investors by resolving many questions over a banking sector crippled by its massive exposure to the property market, which collapsed in 2008.
Spain's leading stock market index, the IBEX-35, slumped in early trade but by mid-afternoon had rallied to be up 75.10 points, or 1.17 percent, to 6,513.20.
On the bond markets, the rate on benchmark 10-year government bonds rose to 6.202 percent from 6.150 at the previous close.
Any banking rescue would not address other broader problems for the economy such as growing sovereign debt, which was subjected to a savage downgrade by Fitch Rating.
"The signs are growing that Spain will submit a request for financial help from the EFSF at the weekend to support its banks," said a report by Commerzbank analysts.
"This could temporarily reduce the pressure on Spain on the financial markets, but it will soon increase the speculation on whether the country will have to request a rescue programme for its normal public finances, too," they said.
Fitch slashed Spain's rating by three notches Thursday, citing ballooning estimates of the cost of a banking crisis, mushrooming debt and a deepening recession.
The long-term rating was chopped to BBB from A and left with a negative outlook, said Fitch.
Fitch said Spanish banks may need 60 billion euros ($75 billion) and as much as 100 billion euros in a worse case -- more than double its earlier 30-billion-euro estimate.
A bank rescue would also push up the state's total accumulated debt at a rapid pace, Fitch said, warning that gross general public debt would likely peak at 95 percent of total economic output in 2015.
In downgrading the outlook for Spain's job-scarred economy, Fitch warned that it no longer expected the country to emerge in 2013 from a recession in which 24.4 percent of the workforce is out of a job.