UPDATE 1-Spain PM Zapatero: govt can meet financing needs

* Austerity measures unpopular with Spanish public

* Govt must submit 2011 budget by end of month

(Adds direct quote, details)

By Stanley White

TOKYO, Sept 1 (Reuters) - Spanish Prime Minister Jose Luis Rodriguez Zapatero said on Wednesday that sovereign bond auctions show the government is able to meet its financing needs as the country implements austerity measures to lower public debt.

Zapatero, speaking to reporters at a news conference in Tokyo, reiterated that the government will meet its target of reducing its budget deficit to 6 percent of gross domestic product in 2011.

Spain has emerged from a steep recession in the first quarter, and Zapatero is trying to push through huge spending cuts and keep his unpopular government in power until 2012 elections.

"Our bonds are solid," Zapatero said. "All new sovereign bond issuances have been successful. The prices that we need to cover our financing needs are good."

Spain sold three-year bonds last month at a lower yield than a previous auction in June, suggesting solid demand for the debt.

Investors have punished Spanish bonds in recent months, concerned about the sluggish economy and a deficit which soared to 11.2 percent of GDP at the end of 2009.

Spain almost halved its central government budget deficit in the first seven months of 2010 compared to a year earlier, helped by a surge in value-added tax revenues, data showed on Tuesday.

"The government has implemented reforms, and the reduction in the public deficit is going ahead as planned," said Zapatero, who is visiting Japan to meet with the Japanese prime minister and business leaders.

The budget, which must be presented to lawmakers by the end of September, will contain 10 billion euros ($12.7 billion) of the 15 billion euros of spending cuts promised this year and next to soothe Spain's creditors.

With one in five Spanish workers unemployed, Zapatero's popularity has plummeted in his second term in office, to 26 percent. (Editing by Joseph Radford)