video transcript

The pressure's off Spain - for now. Madrid's borrowing costs dropped sharply at a debt auction on Thursday as it sold 3.5 billion euros of mid-term debt. And that was before the ECB announced a new bond-buying programme to help Spain and Italy. It did - to the relief of Spain's Prime Minister Mariano Rajoy. While the ECB was setting out how it would help - Rajoy was welcoming his German counterpart. Angela Merkel's visit was hotly anticipated in Spain - even if she wasn't welcomed by all. Merkel insisted she hadn't come to preach - instead she praised the reforms Rajoy has carried out so far. But she made it clear no European government can rely on the ECB or forget about implementing reforms. SOUNDBITE: German Chancellor, Angela Merkel, saying (German): "Other measures cannot replace political action and that is why it is important we politicians do our homework and make our homework so credible the markets believe in us again." Rajoy said they had not discussed the timings of or the conditions of a Spanish bailout - sticking to areas where they agree. SOUNDBITE: Spanish Prime Minister Mariano Rajoy, saying (Spanish): "We agree that we are witnessing strong tensions in the differentials in the euro zone. That means risk premiums neither respond to economic fundamentals, nor to the fiscal consolidation and structural reforms that we are carrying out." Investors seemed to get the news they'd been waiting for. Spain's IBEX index climbed by almost 5% after comments by Merkel and the ECB and yields fell further. The question now is whether the ECB's bond purchases will have a lasting effect on Spanish bond yields and how long Rajoy will hold out before asking for a full bailout. Joanna Partridge, Reuters