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MADRID (Reuters) - Spain's borrowing costs shot up at a bond auction on Thursday, after economic data confirmed the country is back in recession and reports of an outflow of deposits from nationalized Bankia hammered its share price. The Spanish Treasury had to pay around 5 percent to attract buyers of three- and four-year bonds. The longer-dated paper sold with a yield of 5.106 percent, way above the 3.374 percent the last time it was auctioned. "This ... ...

LONDON, May 17 (IFR) - The euro zone crisis was in full swing when Jean-Claude Trichet took the podium in Berlin last October 6 for his final press conference as president of the European Central Bank. Having helped create one of the longest periods of price stability in the history of central banking, Trichet was closing out his eight-year reign under siege. Soaring oil prices had made a mockery of the bank's superlative record on inflation, while the worst recession on the continent since World War II had morphed into a full-scale sovereign debt crisis. ...

THE HAGUE (Reuters) - Prosecutors in the genocide trial of Serb general Ratko Mladic on Thursday described five days of terror in the Bosnian enclave of Srebrenica in July 1995, when troops under his command massacred more than 7,000 unarmed Muslim boys and men. Mladic, 70, sat listening with his back to the public after being warned at the start of his trial on Wednesday for making a throat-slitting gesture to a relative of Srebrenica victims. ...

NAYPYITAW, Myanmar (Reuters) - A further lifting of U.S. sanctions on Myanmar, which could come during a visit by officials to Washington this week, would be crucial to opening its long-isolated economy, a senior Myanmar government official said. Foreign Minister Wunna Maung Lwin meets U.S. officials on Thursday, stoking expectation the United States might announce a further lifting or suspension of sanctions, including investment restrictions, on the country that is also known as Burma. It is the first official visit by a Myanmar minister to the United States in decades. ...

GAZA (Reuters) - The Israeli army fired into the Gaza Strip on Thursday, injuring seven Palestinians in an incident that broke a relative lull in the coastal enclave, Palestinian and Israeli sources said. Palestinian medics said two of the wounded were in a critical condition. Three of those hit were elderly farmers, a hospital source said, but the identity of the other four was not immediately clear. The Israeli army said they shot at people who had approached the fence that separates Gaza from Israel in an area where Palestinian militants had previously planted bombs targeting their patrols. ...

BAGHDAD (Reuters) - Iraq has summoned Ankara's ambassador in Baghdad to protest the behavior of two Turkish diplomats, the latest episode in a drawn-out public row between the neighbors. An official from Iraq's foreign ministry met Turkey's ambassador, Younis Demirer, to complain about the Turkish diplomats in the cities of Basra and Mosul, a statement on the foreign ministry website said on Thursday. "Some activities conducted by the two Turkish General Consuls in Basra and Mosul ... ...

ROME (Reuters) - Italy acted on Thursday to step up security against a resurgence of politically inspired violence driven by its economic crisis and Prime Minister Mario Monti voiced "unconditional support" to tax officials who have come under repeated attack. The measures underscore the growing attention Italian authorities are paying to the threat of violence, either from individuals struggling to make ends meet or from radical groups seeking to exploit a spreading mood of discontent. ...

AMMAN (Reuters) - Syrian President Bashar al-Assad said on Wednesday that countries trying to "sow chaos" in Syria could be infected with it themselves, an apparent warning to Arab Gulf nations that back the insurgency aimed at forcing him from power. Assad's remarks, to a Russian TV channel, came after U.N. staff monitoring an increasingly shaky ceasefire were caught up in an attack that killed at least 21 people, and had to spend a night with rebel forces. ...

FRANKFURT (Reuters) - A Greek exit from the euro zone could expose the European Central Bank and the currency bloc it seeks to protect to hundreds of billions of euros in losses, landing Germany and its partners with a crippling bill. A Greek departure would take Europe into uncharted legal waters. The size of the burden other euro zone states could bear gives them a powerful incentive to keep Greece in the currency club. ...

NAYPYITAW, Myanmar (Reuters) - A further lifting of U.S. sanctions on Myanmar, which could come during a visit by officials to Washington this week, would be crucial to opening its long-isolated economy, a senior Myanmar government official said. Foreign Minister Wunna Maung Lwin meets U.S. officials on Thursday, stoking expectation the United States might announce a further lifting or suspension of sanctions, including investment restrictions, on the country that is also known as Burma. It is the first official visit by a Myanmar minister to the United States in decades. ...

ISTANBUL (Reuters) - Three Turkish soldiers were killed in clashes with Kurdish rebels near the Syrian border in southern Turkey on Thursday, the provincial governor's office said. Separately, a provincial leader of Prime Minister Tayyip Erdogan's ruling AK Party was shot dead late on Wednesday outside his home in Sirnak, near the frontier with Iraq, an official in the governor's office told Reuters. ...

ADEN (Reuters) - A suspected U.S. drone attacked a convoy of Islamist militants in eastern Yemen overnight, killing three people, a local security official said on Thursday, as Washington intensifies its aerial campaign against fighters linked to al Qaeda. The official said the rocket hit the convoy in the Shibam area of the eastern Hadramout province and there was a series of explosions from a vehicle believed to be laden with explosives. Residents of the area told Reuters its three passengers were members of a militant cell. The accounts could not be independently verified. ...