39.5 billion euros ($51.6 billion) in a concerted action to help struggling Spanish banks which were dealt a heavy blow by a domestic real estate fiasco in late 2007.

The eurozone's permanent bailout fund thus provided its first financial assistance since it was created some two months ago. ESM officials said the notes in question would be transferred to FROB, the Spanish bank restructuring fund.

The money will be used by four lenders to meet recapitalization requirements. "The ESM has now started to actively fulfill its role as the permanent rescue mechanism for the eurozone," Managing Director Klaus Regling said in a statement.

Bankia gets lion's share

Spainofficially requested the aid on Monday, following approval of the measure by eurozone governments last week.

The rescue package includes nearly 18 billion euros for Bankia, 9.0 billion euros for Catalunya Banc, 5.0 billion euros for Novogalicia Banco and 4.5 billion euros for Banco de Valencia. Another 2.5 billion euros have been allocated for a so-called "bad bank" which is to absorb toxic real estate assets from struggling lenders.

The ESM's move was also designed to help calm financial markets. But in a sale of sovereign debt earlier on Wednesday, Spain received mixed signals from traders. The country paid less to borrow for bills with a maturity of three and ten years, but more for five-year bonds while investors' appetite remained below the target of 4.5 billion euros.

hg/dr (dpa, AFP)