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LISBON, Portugal (AP) In the latest sign that the financial gloom over Europe is lifting, some of the region's most cash-strapped governments are raising money on bond markets and finding it cheap.

Portugal collected 3.25 billion euros ($4.4 billion) from a sale of five-year government bonds on Thursday, the first of its kind since it agreed to an international rescue program in 2011.

In return for the 78 billion euros ($106 billion) in loans, Portugal accepted a three-year austerity program to heal its finances. The evidence, at least in the markets, suggests that the strategy is working.

The yields, or interest rates, that Europe's troubled economies pay on their loans have fallen steeply as investors have become more optimistic. Nursing Europe back to economic health is seen as vital for global growth.

Ireland exited its own bailout program at the end of last year and this week also had a successful debt issue.

Spain is also benefiting from the improving market mood as its banks recover from a hammering they took when the country's real estate boom went bust.

The Spanish treasury sold 3.53 billion euros in five-year bonds Thursday at an interest rate of 2.38 percent, the lowest it has ever been able to offer for that bond. It also sold 1.76 billion euros in 15-year bonds Thursday at a rate of 4.19 percent.

Meanwhile, the rate for Spain's benchmark 10-year bond on the secondary market where bonds are traded after they are issued was at 3.76 percent. That put it only 1.86 percentage points higher than the equivalent German bond considered a benchmark of safe investment. Similar levels have not been seen since 2011.

In Portugal, Finance Minister Maria Luis Albuquerque said there was demand for 11 billion euros of bonds in the "very successful" sale. The yield was an affordable 4.66 percent. At the height of Portugal's troubles in 2011, the yields on its 10-year bonds soared to almost 18 percent.

Filipe Silva, debt manager of Lisbon-based financial group Banco Carregosa, said recovering countries in the 18-member eurozone are being helped by market conditions.

"The reality is this: there's excess liquidity in the market and investors need good investments. There are few alternatives offering such good returns and investors are looking at where they can make some profit," he said.

Confidence in European bond markets has improved steadily since the summer of 2012, when the European Central Bank said it was ready to do "whatever it takes" to keep the currency union together. The bank said it was ready to buy an unlimited amount of bonds from any eurozone country that requested help. That increased investors' confidence to buy the bonds of countries like Portugal that are still struggling economically.

Fears that Portugal could need a second bailout, like Greece, have faded as the country has reduced its debt load. The budget deficit last year is expected to be around 5.5 percent, compared with 10.1 percent in 2010.

The success, however, has come at a price. As tax hikes and pay cuts depressed consumer demand, the jobless rate has climbed. Though it has been inching lower for nine months, it is still at 15.5 percent. Also, though Portugal emerged from recession last year, its economy still needs to grow muscle. The government forecasts meager growth of 0.8 percent next year.

And despite all the Portuguese efforts, the three main international ratings agencies still classify the country's bonds as junk.

The downturn may also have caused more permanent damage. In 2012, more than 121,000 people emigrated in the biggest outflow since 1960. The 2012 birth rate, meanwhile, was the lowest on record.

The center-right coalition government has had a hard time pushing through its austerity policies amid widespread strikes and street protests. The Constitutional Court has also disallowed some planned pay and pension cuts, rejecting measures four times last year.

The government announced Thursday it is introducing a one-off extra tax on pensions above 1,000 euros a month to make up for the latest rejection, in December, and meet its budget deficit target of 4 percent in 2014.

Portugal also agreed to sell off some state companies as part of the bailout agreement. On Thursday, the government announced it is selling 80 percent of the insurance arm of state-owned bank Caixa Geral de Depositos to China's Fosun for 1 billion euros.

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Ciaran Giles in Madrid contributed to this report.