* Rajoy calls on ECB to change collateral rules
* Spain-Germany announce joint funding programme for SMEs
Spain's Prime Minister Mariano Rajoy on Monday urged the European Central Bank to take steps, including changing its collateral rules, to improve funding conditions for small firms.
Spain has tried to pressure the ECB recently to step in and reduce the gap between the funding costs paid by companies from the euro zone periphery and their counterparts in Germany.
But while a growing number of investors bet the ECB will cut rates at its policy meeting ending on Thursday, it is unclear if it is studying any measure to address the funding situation.
Spain and Germany said on Monday they would act on their own, with finance ministers from both countries announcing a joint programme to spur investment in Spanish firms, although they gave no details.
Rajoy said the sovereign bond purchase programme the ECB announced last year had helped big firms regain access to financial markets but more should be done for smaller firms.
"Things have been done (by the ECB) but it is possible to do more," Rajoy said at an event in Madrid.
"For SMEs, by changing the collateral (rules) or by promoting other kinds of aid and operations through the banks, such as what has already been done in some countries with their central banks and on which we can still move forward," he said.
With Spain deep in recession and more than a quarter of its workforce out of jobs, Rajoy has shifted his economic policy toward stimulus and away from austerity, including a raft of measures to try to help small companies, which account for more than half of Spanish jobs.
The ECB last year widened its collateral rules, giving national central banks the right to accept additional credit claims with lower ratings than the ECB itself could accept as collateral. Eight central banks took advantage of the offer, including Spain. This programme is still running.
While economists generally say the scheme has not made much difference, ECB President Mario Draghi said it has worked "beautifully" in some countries and not at all in others.
Widening collateral rules does not take credit risk off banks' books, but it makes it more attractive for them to grant loans to companies as they can later use these loans to get central bank funds.
But the ECB applies an average discount of 53 percent on these loans. Some economists believe one way for the ECB to help would be to discount these loans less.
Other options mulled to ease the current credit crunch include the possibility for the European Investment Bank to provide credit guarantees to companies which need to finance a specific project or order.
Spain's Economy Minister Luis de Guindos, speaking at a news conference with German Finance Minister Wolfgang Schaeuble in Granada, said the two countries would launch a government-sponsored funding programme for small and medium-size firms.
He said the details of the plan still had to be worked out.