* Spain bond tender goes well, but yields still jump
* Expects to cut issues of new debt in 2011
* PM says time has come for common euro zone fiscal policy
* Spain sells 2.5 bln euros in 3-yr bonds, yields jump
(Adds Zapatero comments, bond auction result)
By Paul Day
MADRID, Dec 2 (Reuters) - Spain insisted on Thursday it will not need to tap a rescue fund but Prime Minister Jose Luis Rodriguez Zapatero said the time has come for the euro zone to move towards a more integrated fiscal and economic policy.
Spain is quickly moving into the eye of the storm in Europe's debt crisis and its cost of borrowing at a three-year bond tender on Thursday was around 50 percent higher compared to the beginning of October.
But the jump was not as bad as feared and demand was solid, reflecting expectations the European Central Bank will extend its bond buying programme and the belief of some investors that Spain is not as much at risk as recent market action suggests.
"Spain isn't going to have to tap any EU fund or resort to them," Spanish Prime Minister Jose Luis Rodriguez Zapatero said, according to a transcript of an interview with CNBC.
"It's a country which is going through a crisis because of the financial system crisis and the real estate bubble bursting, but we are undergoing reform." <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
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Spain cannot defy markets without ECB support [ID:nLDE6B01KD] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
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