(Reuters) - Spain sold 3.56 billion euros (2.78 billion pounds) of short-term debt on Tuesday, just above its target range, and debt costs dipped from a month ago though held at high levels as investors were left unimpressed by the country's latest wave of austerity measures. The Treasury sold 2.6 billion euros of 12-month bills, and 962 million euros of 18-month bills, which together was just above the 2.5 billion euro to 3.5 billion euro objective. Spain is struggling to assure debt markets it can control its finances despite unveiling an austerity package worth 65 billion euros last week as investors fret that making harsh cuts will only prolong a deep recession. Borrowing costs remained high for the country to service even its short-term debt, coming before key auctions of longer-term bonds on Thursday. The average yield on the 12-month bill was 3.918 percent, down from 5.074 percent last month, and 4.242 percent on the 18-month bill compared with 5.107 percent at auction in June. The Treasury saw mixed demand for the sales compared with a month ago. The bid-to-cover ratio was 2.2 on the 12-month bill, unchanged from June, and was 3.7 on the longer-dated bill, compared with 4.4 last time.

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