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Rajoy to meet regional leaders to promote austerity regime

2 October 2012 Last updated at 11:32 BST

Spain's prime minister Mariano Rajoy is to meet leaders of the country's regions later on Tuesday, in an attempt to persuade all 17 of them to follow his austerity regime.

The most troubling of the regions is Catalonia, where the government is threatening to hold a referendum on independence from Spain.

All this worries the financial markets, which is why the government is seeing its borrowing costs climb.

Jeremy Howell reports.