MADRID — Spain's government was hit by the country's financial crisis on two fronts Tuesday as thousands of protestors enraged with austerity cutbacks and tax hikes marched on parliament while its borrowing costs increased in an auction of its debt.

More than 1,000 riot police blocked off access to the parliament building in the heart of Madrid, forcing protesters to take over a nearby square.

The demonstration, organized with an "Occupy Congress" slogan, drew demonstrators weary of nine straight months of painful measures imposed by Prime Minister Mariano Rajoy.

"The only solution is that we should put everyone in Parliament out on the street so they know what it's like," said one of the protestors, civil servant Maria Pilar Lopez.

Lopez and others are calling for fresh elections, claiming the government's hard-hitting austerity measures are proof that the ruling Popular Party misled voters to get elected last November.

While Rajoy has said he has no plans to cut pensions for Spaniards, Lopez fears her retirement age could be raised from 65 to as much as 70. Three of her seven nieces and nephews have been laid off since Rajoy took office, and she said the prospect of them finding jobs "is very bleak."

Spain is struggling in its second recession in three years with unemployment near 25 percent. The country has introduced austerity measures and economic reforms in a bid to convince its euro partners and investors that it is serious about reducing its bloated deficit to 6.3 percent of gross domestic product in 2012 and 4.5 percent next year.

The deficit reached €50.1 billion ($64.79 billion), equivalent to 4.77 percent of GDP, through August, the government said Tuesday. Secretary of state for the budget Marta Fernandez Curras said the deficit "is under control."

Spain has been under pressure from investors to apply for European Central Bank assistance in keeping its borrowing costs down. Rajoy has yet to say whether Madrid will apply for the aid, reluctant to ask since such assistance comes with strings attached.

Concerns over the country's public finances were evident earlier Wednesday when the Treasury sold €3.98 billion ($5.14 billion) in short-term debt but at a higher cost.

It sold €1.39 billion in three-month bills at an average interest rate of 1.2 percent, up from 0.95 percent in the last such auction Aug. 28, and €2.58 billion in six-month bills on a yield of 2.21 percent, up from 2.03 percent.

The government is expected to present a new batch of reforms Thursday as it unveils a draft budget for 2013.

A day later, an auditor will release the results of stress tests on those Spanish banks, which have been hit by the collapse of the country's real estate sector. The government will then judge how much of a €100 billion loan it will tap to help bail out the banks. Initial estimates say the banks will need some €60 billion.