ROME, Jan 12: Italy and Spain aced their first bond auctions of the year on Thursday as the ECB praised crisis-hit eurozone countries on their progress, but concern swirled over Greece's fate.

Italy raised 12 billion euros in 12-month bonds at rates that were less than half the level at an auction last month, while Spain rustled up nearly 10 billion euros in its sale -double the amount that it had been aiming for.

Analysts said the auctions reflected an easing of market jitters as well as the influence of cheap funds made available to crisis-hit banks by the European Central Bank last month, which have encouraged some lenders to buy up bonds.

ECB head Mario Draghi said some of the debt-wracked eurozone countries were making 'very substantial, very significant' progress on getting their finances in order and the markets were 'showing some appreciation' of the fact.

He said the bank's governing council 'welcomes the agreement to move to a stronger economic union' and urged EU leaders to sign the fiscal compact they are negotiating which would legally bind eurozone governments to curb their deficits this month.

But relief in Italy and Spain was countered by mounting concern in crisis-struck Greece, where banks locked in negotiations on slashing Greece's debt burden said after top-level talks in Athens that time was 'running short' for deal.

As European Commission head Jose Manuel Barroso called for an increase in emergency funds for eurozone states, IMF chief Christine Lagarde said aid to Greece would have to be raised by a 'significant amount of tens of billions' of euros.

Greece's deputy finance minister Philippos Sahinidis agreed that Athens would need more funds from its European partners if private lenders fail to write off the expected amount of 100 billion euros of its debt.—AFP