MADRID, Aug 17 (Reuters) - Spanish banks' bad loans rose to a record high in June as assets tied to the country's deflating property market soured further, keeping the financial sector at the forefront of investor concerns about the country's fragile economy.
In the same month that Spain sought a European bailout of up to 100 billion euros for its struggling lenders, their non-performing loans rose to 9.42 percent of outstanding portfolios from 8.95 percent in May, central bank data showed on Friday.
Loans that fell into arrears increased by 8.4 billion euros ($1.03 billion) to 164.4 billion euros.
Bad loan rates have risen steadily since a decade-long property boom ended four years ago, with the country now in its second recession since 2009 and one in four Spaniards out of work.
They could rise further in coming months should an economic recovery fail to materialise, as many banks have refinanced debt owed by struggling companies to prevent them going bust.
Provisions on loan losses and writedowns on real estate assets drove many Spanish banks' profits down sharply in the first half of the year.
Europe-wide, bad loans held by banks have doubled since the start of the financial crisis in 2008, leaving 1 trillion euros as non-performing, according to a study by PriceWaterhouseCoopers published on Wednesday.
Bad loan rates rose most in Greece, Italy, and Spain, it showed.