European markets rise on hopes of aid for Spain U.S. markets also opened higher Thursday morning, with the Dow Jones and Standard & Poor's indexes rising about 1 percent. Financial industry sources describe the plan as a sort of "bailout lite" that could lend Spain an estimated $65 billion to $80 billion, significantly less than previous European Union rescues offered to Greece, Ireland and Portugal. Though the rescue funds would be channeled through the Spanish government, they would be earmarked strictly for the recapitalization of banks and could not be used to cover budget shortfalls, the industry sources said. Thus, Spain could potentially avoid many of the humiliating conditions - such as demands for independent auditors and more budget cuts - that were attached to the bailouts of other troubled European countries. Such a proposal could be palatable to the Germans, who have thus far opposed calls in Madrid to have European rescue funds pumped directly into Spanish banks. Such a direct intervention would have allowed Spain's new prime minister, Mariano Rajoy, to avoid the embarrassment of going hat in hand for help only six months after coming to power. But German officials have argued that the action would violate the rules of Europe's official rescue fund, which is designed to lend only to national governments. But directing rescue money for Spanish banks first through the hands of the national government is allowed under the European bailout fund's bylaws. Giving the Spanish government further cover, the funds could potentially be transferred directly to a national account created specifically to aid Spain's banks, a shade of difference that highlights the political nuancing that has repeatedly complicated negotiations aimed at solving Europe's 21 / 2-year-old debt crisis. The compromise could, analysts say, provide short-term medicine for the continent's crisis even as European leaders race to forge a new pact of medium-term bigger fixes that would include deeper economic integration and regional oversight of banks that could take months or years to take shape. "They need a solution now," said one senior Spanish banking industry official who declined to be named given the sensitivity of the issue. But we need a solution that also allows the government to save face. European officials were discussing the compromise and other options, according to sources familiar with the talks. But both the Spanish government and European officials are likely to wait at least several days before announcing a deal. The Spanish government believes a final report from the International Monetary Fund on the Spanish banking system due on Monday will help provide an accurate number of the amount needed by the country's troubled financial institutions. Spanish banks are facing billions in toxic loans from the bursting of a U.S.-like property bubble, with the government last month moving to nationalize one of the nation's largest banks, Bankia, after it said it needed a whopping $23 billion in fresh capital. Some economists have estimated the total need for the Spanish banking system at $150 billion or more. But Spanish banking executives have placed the need lower, between $50 billion and $85 billion. By comparison, Greece's current bailout is costing about $172 billion. A quick solution to Spain's woes is considered crucial for avoiding a financial collapse in Europe's fourth-largest economy that could have dire consequences for the global economy. Publicly, however, Spanish and other European officials are remaining mum on any deal - possibly mimicking officials in Greece, Ireland and Portugal who also denied bailout talk while they were privately negotiating aid. "I have absolutely not discussed any intervention in Spain's banks today," Spanish economic minister Luis de Guindos told reporters in Brussels after meetings with E.U. officials Wednesday. But the possibility of a deal helped Spain pass an important test on Thursday - the sale of $2.62 billion worth of bonds. Though the interest rates demanded by investors were higher than at Spain's April bond sale, the relative success of the debt auction further calmed market nerves. That, analysts say, could quickly change, if there's no bailout on the way. "The expectation is that the Spanish banks are going to get bailed out," said Carles Vergara, professor of finance at Madrid IE Business School. If that doesn't happen, expect problems. Birnbaum reported from Berlin.