Spanish government borrowing costs rose yesterday as the financial markets drew no new confidence from a sweeping election win for a centre-right government committed to radical budget cuts so as to balance the public finances.

The yield or rate of return earned by holders of benchmark Spanish 10-year government bonds rose to 6.500 per cent in late morning trading from 6.345 per cent at the close on Friday.

The spread or gap with the borrowing rate for Germany, the eurozone benchmark, widened to 4.58 percentage points from 4.33 percentage points on Friday, as investors favoured the safety of German debt.

Conservative leader Mariano Rajoy’s Popular Party won by its biggest margin ever in Sunday’s election by voters desperate for someone to do something about Spain’s punishing 21.5 per cent jobless rate.

Spanish stocks slumped more than two per cent, with the markets realising that the new government has a mountain to climb if it is to stabilise the country’s strained public finances and ensure it does not get sucked down into the eurozone debt quagmire.

Mr Rajoy’s “victory was largely expected and so the news offers no real lead for the markets. Now, it is up to the new government to show it can really act”, said Nordine Naam, bond strategist at French investment bank Natixis.