Spain on track to meet goals: presidential source

German Chancellor Angela Merkel on Saturday urged countries like Spain and Italy to reduce their sovereign debt levels and said Spain would probably have to do more to win back the markets' confidence.

The source told Reuters additional measures the government had put in place since July had given it a 7.65-billion-euro ($10.6 billion) cushion, enabling it to meet its goal of cutting its public deficit to 6 percent of gross domestic product this year compared to 9.3 percent in 2010.

Spain has raised an extra 2 billion euros from the auction of mobile licenses, 2.6 billion from front-loading corporate tax payments, 400 million from new rules on generic pharmaceuticals and 2 billion from lower-than-budgeted interest payments, the source said.

He said the government has also asked its mianistries to save 654 million euros before the end of the year.

"This gives us margin to compensate for any slippage" from the autonomous regions, the source said.

Economists are skeptical that the government, which polls show trailing the conservative opposition before general elections on November 20, can meet its deficit target because of concerns over its 17 autonomous regions and cooling economic growth.

The unpopular Socialist government pushed through further reforms this summer after the risk premium on the country's debt spiraled to record highs and fueled concerns it would need a bailout like Greece, Ireland and Portugal.

EU finance ministers neared agreement on Saturday on a framework to bolster European banks to help tackle the euro zone debt crisis, but were still wrangling over how to do it as Spain, Italy and Portugal raised concerns over the cost.

(Reporting by Fiona Ortiz; Writing by Tracy Rucinski; Editing by Sonya Hepinstall)