Merkel meets Rajoy to focus on Spain's progress

German Chancellor Angela Merkel will meet with Spanish Prime Minister Mariano Rajoy in Madrid on Thursday for talks that are expected to focus on Spain's progress with crushing austerity measures.

Before Merkel arrives, Spain is scheduled to hold a bond auction that will test investor confidence in the country that is reeling from unemployment of nearly 25 percent and a deep recession.

And while the two meet on Thursday, the European Central Bank is expected to announce a plan to buy government bonds from economically hurting countries like Spain.

Spain has accepted a loan of up to 100 billion euros ($126 billion) to rescue its banks. But the government, which is struggling to pay punishingly high interest rates to raise money, is under pressure to accept a sovereign bailout.